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What Is Business Life Insurance?
<lingo>Business life insurance is a type of life insurance policy the business owner can take out on specifically important people within the company. Most commonly, this form allows one partner to cover the other partner. For example, when one partner dies, the proceeds of the policy are paid out to the other business partner. He or she can then purchase the deceased partner’s share of the business from his or her estate. This type of agreement can help to keep the business running forward when a sudden or significant death occurs.</lingo>
Business Life Insurance Clearly and Briefly Explained
This form of life insurance is used as a way to pay for a buy-sell agreement. As noted, when one partner dies, the other partner can use the funds to buy out the other’s share of the company from the estate. In doing so, it may be possible to reduce risks associated with heirs owning a portion of the business and, potentially not agreeing on the action to keep it moving forward. In this case, a business life insurance policy can be ideal to keep all people involved in the business satisfied.
<twitter>Business life insurance is a type of life insurance policy the business owner can take out on specifically important people within the company. </twitter>
This is different from key man insurance. Key man insurance is a type of policy that a company takes out on a specific employee that is critical to the business. This may include the business owner or others that would be hard to replace should they die while serving the company’s needs. If that person dies, the policy pays out to the company, which can use those funds to obtain a new employee to cover the lost employee’s tasks.
Business life insurance tends to focus more on the ownership aspect of the process. It is a type of life insurance policy, and as such, it pays out only at the time of a person’s death. It also does not pay the family of the individual anything. Because the company takes out the policy out and pays for the premiums, they are generally listed as the beneficiary of the policy. As a result of this, the proceeds from the policy go towards the company’s needs.
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