Life Insurance and Small Business
When faced with the death of a small business owner, it can be the source of great instability. Besides personal loss, it raises logistical questions involving the replacement of key leadership going forward.
Life insurance can provide operating funds during this transitional period and can assist in getting the company through a time of difficulty. Additionally, it can allow the surviving owners to buy the late partner’s shares from his or her heirs.
In a company that has multiple owners, you can combine life insurance policies in a buy-sell agreement, also known as a buyout agreement. This is a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies or is otherwise forced to leave the business, or chooses to leave the business. It would stipulate that on the death of one partner, the remaining partners can buy out the surviving family’s share at a previously set price. The life insurance would then pay the buyout.
There are two main types of life insurance, term and permanent.
Every individual and family’s insurance situation is unique, so you should consult with an insurance professional for guidance on the best type of life insurance for your personal and your business needs.
Personal life insurance can help your family pay off any business debt and cover living expenses after your passing. Your family would then have time to decide what arrangements can be made with the business.
Key person life insurance is a type that protects against the loss of a critically important employee. In the event of death, the insurance would pay the owner or owners of the business.
Small business owners may need several types of insurance policies. David Lerner Associates offers a variety of financial products and services designed to protect your family and business.
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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website: www.davidlerner.com