Life Insurance

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Life Insurance
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Life Insurance for Small- Business Partners
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• Few events can cause more turmoil in a small
  business than the death of an owner. Besides the
  personal loss, theres the practical loss of a
  key asset and the question of ownership going
  forward.
• A life insurance payout can provide operating
  cash to get the company through a tough time. It
  can also help the surviving owners buy a late
  partners share from his or her heirs.
  Arrangements like this are often set in a
  buy-sell agreement, one of the most important
  documents in any business partnership.
• Buy-sell agreements are like prenups. Theyre
  legal contracts between business co-owners,
  detailing how the ownership transfers if one
  partner dies, becomes disabled or leaves the
  business.
• Creating an agreement is one step in the
  succession planning process. Funding is the
  other. Thats where life insurance comes in.

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Creating a business succession plan

• If youre already in business with a partner and
  dont have a buy-sell agreement signed and
  funded, start the process now. Without such an
  agreement, you could wind up in business with
  your partners spouse or kids. And without a life
  insurance policy, you might have difficulty
  funding the agreement. For example, the loss of
  one owner could make it hard to qualify for a
  loan.
• Before he joined New York Life some 30 years ago,
  Goodin owned a handful of Shell Oil gas stations
  in Reno with a partner. He says one of the first
  things they did was create a buy-sell agreement
  and purchase life insurance on each other.
• I didnt want to be partners with his wife if he
  died, he says.

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Choosing term or perm

• Pick a life insurance policy based on the length
  of time youll need coverage and your budget.
• Term life provides coverage for a certain period
  such as 10, 20 or 30 years and pays out if
  the insured person dies within the policys term.
• Permanent life insurance such as whole,
  universal or variable life costs many times
  more than term policies. This is because the
  policy covers the insureds entire lifetime, and
  features a savings account, which grows
  tax-deferred. Once enough cash value is built up,
  the owner can borrow from it or terminate the
  policy for the surrender value.

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• Permanent life insurance such as whole,
  universal or variable life costs many times
  more than term policies. This is because the
  policy covers the insureds entire lifetime, and
  features a savings account, which grows
  tax-deferred. Once enough cash value is built up,
  the owner can borrow from it or terminate the
  policy for the surrender value.
• Permanent life insurance might be a good choice
  if you plan to stay in business together for many
  years and want the forced savings that a policy
  provides. After many years, the cash value could
  be used to fund a buyout if a partner leaves for
  a reason other than death. At retirement, each
  partner can take ownership of their own policy
  and use the cash value to supplement their
  savings.
• Its also a good option if you have limited cash
  flow, even if you might want permanent life
  insurance later on. Most term life policies are
  convertible to permanent life insurance.
• Source https//www.nerdwallet.com/blog/insurance/
  life-insurance-small-business-partners/ 

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