Business owners often have two protection problems: protecting their family and protecting the company. Let's break down the basics.
If your top salesperson, lead developer, or co-founder passes away, the business may lose significant revenue. A key person policy is owned by the business and pays the business, giving you funds to hire a replacement and keep the doors open.
If you have a business partner, what happens to their share of the business if they die? Without a funded buy-sell agreement, you might end up in business with their spouse. Life insurance provides the immediate cash needed to buy out the deceased partner's heirs.
Many lenders, especially those providing SBA loans, require the business owner to assign a life insurance policy to the bank as collateral before approving the loan.