Business life insurance can help a company absorb the loss of a key person.
Quick overview
- What it is
- Business life insurance is not a separate product. It is a planning use-case funded by life insurance policies owned by a business or its owners.
- Who commonly considers it
- Often considered by co-owners, partnerships, and companies that depend on a key person.
- What it may help with
- Buy-sell funding, key person protection, and covering business debt after an unexpected loss.
Common business planning uses
These are arrangements funded with life insurance. Structure and tax treatment vary, so coordinate with your attorney and accountant.
Key Person Life Insurance
The business owns coverage on someone essential to operations to help it stabilize after a loss.
Buy-Sell Agreement Funding
Life insurance provides funds so surviving owners can buy out a departing owner’s share.
Business Loan Protection
Coverage sized to help repay a business loan or line of credit.
Executive Bonus Plans
An arrangement where a business helps fund a policy owned by an executive. Tax treatment varies.
You may be considering this if…
- You co-own a business and want a transition plan.
- Your company relies on a key person’s skills or relationships.
- You have business debt that would be hard to cover without you.
How it works
A business can own life insurance on owners or key employees. The benefit gives the company funds to stabilize, buy out a share, or repay debt.
Common structures include buy-sell funding, key-person coverage, and loan protection, often coordinated with your attorney and accountant.
Why people consider it
- Helps a business keep running through a difficult transition.
- Can fund a buy-sell agreement between owners.
- Can protect a business loan or line of credit.
What to understand before choosing it
- Structure and ownership details matter, so it is worth coordinating with your advisors.
- The right amount depends on the role and the business.
- Tax treatment varies, so confirm with a tax professional.
Compare related options
A quick look at how this fits next to related options. The right fit depends on your goals, budget, and eligibility.
Questions about Business Life Insurance
Who owns the policy, me or the business?
It depends on the goal. Buy-sell and key-person arrangements are often owned by the business or the owners. We’ll coordinate with your attorney or accountant.
How much coverage does a business need?
It depends on the role being protected and the obligations involved. We can work through a reasonable amount together.
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- Step 1 Tell me what you're looking for
- Step 2 Compare your options with me
- Step 3 Choose what fits
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