Business Owners
Keeping the doors open when the person who opens them is gone.
A small business is often one or two people deep on the things that actually matter. Life insurance is how a company survives losing one of them.
The situation
Where households like yours are most exposed
Long Island runs on small business: contractors, restaurants, medical practices, shops that have been in the same family for three generations. In most of them, one person holds the client relationships, the vendor terms, and the operating knowledge in their head. If that person is gone on a Tuesday, the business has weeks, not years, to figure it out. Insurance turns that cliff into a runway.
What to watch
Four things that catch people out
None of these are exotic. They are just the ones that get overlooked until it is too late to fix cheaply.
A key person walking out the door permanently
Key person coverage is owned by the business and paid to the business. It funds the gap while you recruit, retrain, and reassure the clients who were loyal to a person rather than a logo.
A partner’s family inheriting half your company
Without a funded buy sell agreement, a deceased partner’s share passes to their heirs. You can end up in business with someone who has never worked a day in it and wants out at a price you cannot pay.
Personally guaranteed debt
SBA loans, equipment financing, and commercial leases are frequently signed personally. That obligation follows your estate, which means it follows your family.
Attracting people you cannot outbid on salary
Executive bonus arrangements and other benefit structures let a small company offer something a larger competitor is not offering, without matching their payroll.
What usually fits
The coverage that tends to solve it
Not a recommendation for you specifically. A starting point for the conversation.
Term Life
The most efficient way to fund key person coverage and a buy sell agreement for a defined period.
How it worksWhole Life
Permanent coverage for succession planning and for obligations that do not have an end date.
How it worksIndexed Universal Life
Used in executive bonus and supplemental retirement arrangements where cash value flexibility matters.
How it works
Before you buy
A short checklist
Work through these and you will walk into any conversation already knowing more than most buyers.
- 01Value the business honestly, then revisit it every two to three years
- 02Put a buy sell agreement in writing and fund it, rather than intending to
- 03List every personally guaranteed obligation and total it
- 04Identify who besides you can actually run the place
- 05Coordinate the business coverage with your personal policies so nothing is double counted
FAQ
Business Owners: common questions
01Who owns a key person policy?
The business owns it, pays the premium, and is the beneficiary. The insured is the key employee, and they have to consent in writing. The proceeds go to the company to absorb the disruption, which is a separate thing from any personal coverage that individual carries for their own family.02How does a buy sell agreement get funded?
Most commonly with life insurance sized to each owner’s share. Two structures dominate: cross purchase, where the owners insure each other, and entity purchase, where the company insures each owner. Which one fits depends on how many owners there are and your tax situation, so this is a conversation to have with your attorney and accountant at the table.03Are the premiums deductible?
Generally no, when the business is the beneficiary. The tradeoff is that the proceeds are generally received income tax free. Executive bonus arrangements work differently. Tax treatment depends on structure and on your specific circumstances, so confirm anything here with your own CPA before acting on it.
Next step
Let’s find out what you’d actually pay.
A short conversation, real numbers from multiple carriers, and no obligation at the end of it. Most people are surprised how quick it is.
No cost, no obligation, and your information is never sold. Monday to Saturday, 9am to 8pm ET.