This agreement is for when a company has more than one owner. In a Partnership Buy-Sell Agreement, the co-owners of the company purchase life insurance on the other owners- not themselves. If an owner passes, the policy death benefit is paid to the co-owners and the proceeds are then used to pay the heirs so that the co-owners maintain ownership of the business.

As business owner, you know your top employees and how valuable their knowledge and skills are to the success of your business. Key employee insurance refers to a life insurance policy your corporation or business purchases on a key employee’s life. Should something happen to your key employee, the corporation/business receives the policy benefits to help offset the income loss and to hire and train a new employee.

Many family-owned businesses can have one or more heirs working for the business. If the owner passes, this type of policy provides a death benefit that the heir set to take over the family business can use to pay the other heirs for their shares or to the heirs not working in the family business. This can make the ownership transition smoother.

Businesses that have a Whole-Life insurance policy may want to use the cash option feature. A Whole-Life Policy can offer liquidity via partial withdrawals or loans against the cash value of the account. Access to the cash value enables businesses to pay down loans, make improvements or handle unexpected expenses.

As companies look for ways to reward and/or retain key employees, life insurance can offer a solution. A SERP is a non-qualified retirement plan offered to key executives as a long-term incentive. Since it is a non-qualified plan, there are no tax advantages to the company or to the employee which allows the company to be selective when they offer the plan. When the benefits are paid out to the key employee, they are deducted as a company business expense.