Term Life Insurance at Work

Protect the Business: Insure the Owners

By Taw Jackson - Advisor, Personal Insurance

Key Person term life insurance is often a crucial financial and business planning tool to help ensure a business keeps going without a hiccup in the event of the death of a partner-owner.

The death of a partner-owner typically has immediate and difficult impacts on the company, but a carefully reasoned succession plan and thought-through plan for transfer of ownership - with the ensured funding to pay for that transfer - can go a long way toward keeping the business running at peak form the week after, the months after and into the future.

A key person term life insurance product is part of the discussion between the business owners concerning succession planning, long-term financing and the long-term growth of a business. This term insurance is often used to provide the immediate cash to allow the surviving partner to purchase from the deceased's family the company shares that were held by the deceased partner. Other ways to ensure such cash is available for this need include a whole life policy or keeping cash on hand in a protected, separate account.

Once business owners start their "what if" and "what will we do" discussions, they want to sit down with both their attorney and their insurance advisor. The attorney will formalize buy-sell agreements and any other legal documents that would be needed to protect both the business and the deceased partner's family in the event of a partner-owner's death. And the insurance advisor will map out the options, and then the decision, for funding the buyout plans. Because the need is temporary, term life insurance policies are often the best and most cost-effective choice.

Taw Jackson specializes in term life insurance and enjoys trusted partnerships with experts in the life insurance field. Taw is located in the Kalispell office of Payne Financial Group. He can be reached directly at tjackson@pfg-insurance.com.