The untimely death of a business owner can be damaging to a small business. If there are employees, they have lost their leader. If there are other business partners, they have decisions to make as to the future of the business. There are ways to prepare in advance for unfortunate situations.

Key Person Insurance

The first way is for the business to purchase a Key Person life insurance policy where the business owner or key employee is the insured. When a business owner or key employee dies, the policy pays the death benefit to the business. The business can use the funds to pay for existing debt, the expenses for finding someone to fill the vacancy, and any loss of revenue resulting from the death.

Buy-Sell Agreements

Another way to prepare is called a Buy-Sell agreement; used for businesses that are owned by two or more persons. The owners decide how an owner’s share is handled when they are no longer living. A life insurance policy provides the funding for the agreement. The funds pay the estate of the deceased owner to buy out the deceased’s shares.

If you are a small business owner and need to get your ducks in a row, I am here to help. You can call me at 267.384.5300 or contact me online to get started on a plan.

Kenneth “J.R.” Hager
Life & Health Advisor