Life Insurance Strategies
for Business Owners

For business owners, life insurance does more than family protection. It funds buyouts, retention, and continuity — and it can do all that with tax advantages that personal life insurance can't touch.

70%

of family businesses fail to transition to the next generation

Often because of a single uninsured event — the death or disability of a key owner. A funded buy-sell agreement is the difference between continuity and forced sale.

Four ways businesses use life insurance

Key Person Insurance

The business owns a policy on a critical employee (often the founder or rainmaker). If they die, the business receives the death benefit to weather the disruption — replace them, pay debts, or buy out their family.

Buy-Sell Agreement Funding

Co-owners insure each other. When one dies, the surviving owners receive a death benefit large enough to buy out the deceased's share at a pre-agreed price. Without this, families end up as unwilling business partners.

Executive Bonus Plan

Company pays premium on a life insurance policy owned by a key executive. The executive owns the cash value and death benefit, but the premium counts as taxable bonus income. Tax-efficient executive retention tool.

Section 162 Plan

Similar to Executive Bonus but with more flexibility — typically used for executives in C-corps. Cash value grows tax-deferred, and the policy can supplement retirement income.

The buy-sell trap most partnerships fall into

Most partnerships HAVE a buy-sell agreement. Very few have it FUNDED. An unfunded buy-sell is just a piece of paper that says "the surviving partners will buy out the deceased's share." If those partners don't have the cash, the family becomes an unwilling partner — or the business ends up sold at a fire-sale price.

Life insurance — sized to the agreed buyout price — is what makes the agreement actually work.