Partner’s Peace of Mind

Key Man Insurance and Buy-Sell Agreements

Your business is thriving due to the hard work of you and your partners, but what will you face if something happens to you or one of them? With our Buy-Sell Agreements and Key Man Insurance, your business and partners stay protected from the unexpected.

Contact us today to find out how we can help.

What Is Key Man Insurance?

Key man insurance is a business insurance coverage plan in which you buy a life insurance policy on all partners of the business. The most important aspect is that the beneficiary is your business. This type of policy gives you the funds necessary to operate the business if a partner were to die.

Here are some things key man insurance can help with:

  • Recruiting and developing a replacement for the employee who has passed
  • Adding to your company’s credit status as this coverage is a business asset
  • Taking out withdrawals or loans from the policy’s cash value

One often unseen benefit of key man insurance is that your top employees feel valued when included in this plan, leading to stronger morale among the leadership.

What Are Buy-Sell Agreements?

You likely really enjoy working with your partners, but what about working with their heirs? This situation is precisely why you need key man insurance and buy-sell agreements; otherwise, when a partner dies, their owned part of the company enters the estate unless other plans are made.

With buy-sell agreements, you name the exact terms that describe which shares of the business can be sold or transferred to another person. You also create provisions that allow the company to buy outstanding shares from the estate of a partner who has passed. Buy-sell agreements usually have a term in the policy that describes the type and amount of key man life insurance the business will have so that money is on hand to buy the stock.

Buy-sell agreements can be written on your own or you may hire an attorney to help you draft it. If you do plan to write your own, get it reviewed by an attorney to make sure it is legally compliant.

As your personal situations change (i.e., marriage, birth of a child or job promotion), so will your life insurance needs. Care should be taken to ensure this product is suitable for your long-term life insurance needs. You should weigh any associated costs before making a purchase. Life
insurance has fees and charges associated with it that include costs of insurance that vary with such characteristics of the insured as gender, health and age, and has additional charges for riders that customize a policy to fit your individual needs.

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