Business Owner’s Insurance: Buy Sell Life Insurance, Key-Man Life Insurance Serving Farmingdale, Smithtown, Melville, Huntington, Hauppauge, NY and Surrounding Areas
Smart Insurance for Life’s “What If” Moments
Every successful business starts with successful relationships. In many cases, two individuals join together to create an extraordinary business venture, capitalizing on their individual strengths, talents and mutual determination to succeed. Both contribute greatly to the success of a company and both arche in maintaining the growth and financial stability of their business. Not only is their personal income and ongoing success dependent on their continued contributions, but the welfare and financial stability of their employees is predicated on their continued input.
What happens when one partner dies? In many cases, the death of a key partner/employee is the death of the company. Many businesses liquidate upon the demise of such an integral member. The financial risks involved in losing a key employee or partner are too great to leave to chance.
Cafaro Insurance Agency offers the protection you need to ensure the continued success, financial stability and ongoing operation of your business in the event of the death of a business partner or key employee.
Buy and Sell Insurance
A buy-sell agreement is a legally binding contract between co-owners of a business. Also referred to as a buyout agreement, a buy-sell agreement determines the outcome should one of the partners die, are forced to leave, or voluntarily leave the business.
Many companies avoid the financial pitfalls that commonly occur after the death or voluntary leaving of a co-owner by funding their buy-sell agreement with life insurance. In this case, the individual co-owners purchase life insurance policies on one another. The surviving beneficiary of each policy, be it the company or the owner, would receive the insurance policy death benefit. These types of policies can be structured so that your family would receive a sum of cash as payment for your interest in the business, offering financial support for them and ongoing stability for the company.
A buy sell life insurance agreement offers many benefits, including:
- Beneficial To Both Parties – the deceased surviving family members benefit as well as the company.
- Serious Illness and Injury Protection – Buy-sell life insurance is often used to protect against permanent disability and/or eligible serious medical conditions
- Ownership Options- These policies may be owned both individually or on behalf of the lives of their owners. They may also be owned by a corporation or on behalf of those insured.
Key-Man Life Insurance
Whether you’re a new company or an established corporation, key-man insurance can be a valuable form of protection. Key-man insurance is exactly what it says: insurance on a key person in your business. This could be a partner, an owner, the business founder, or a particular individual whose knowledge and expertise is key to the continued success of your company.
Consider the adverse effect the loss of your most valuable employee and you’ll see the importance of key man life insurance.
A company purchases life insurance that covers the key employee. The company is responsible for premium payment and is also the beneficiary of the life insurance policy. Should the covered employee died, the company receives the life insurance benefit pay off. The purpose of key life insurance is to help the company survive the loss of a vital individual. This benefit may be used to aid in recruiting a replacement for the deceased employee or partner, pay severance to employees as the company reorganizes, and even cover the expense of closing the business, if necessary. Key-Man Insurance can also help a company avoid bankruptcy, covering business expenses so that other options may be examined and implemented.