Forums » Life Insurance

Business Needs Met by Life Insurance Products:

    • 144 posts
    March 1, 2014 9:42 AM IST
    • A business – or an individual who owns a business – generally purchases life insurance products for one of two reasons:
    • An individual life insurance policy can provide funds to ensure that the business continuesin the event of the death of an owner, partner, or key person.
    • A business can purchase life insurance to provide benefits for its employees.


    • Business Continuation Insurance:
    • A business continuation insurance plan is an insurance plan designed to enable a business owner to provide for the business continued operation if the owner or a key person dies.
    • A key person is any person or employee whose continued participation in the business is necessary to the success of the business and whose death would cause the business a significant financial loss.
    • Any closely held business may need to establish a business continuation insurance plan in order to ensure that the business will continue if an owner or key employee dies.
    • A closely held business is a sole proprietorship, a partnership, or a corporation that is owned by only few individuals.


    • Buy – Sell Agreements:
    • Liquidation is the process of selling off cash a business’ assets, and using that cash to pay the business debts; any funds remaining are then distributed to the owners of the business.
    • A buy-sell agreement is an agreement in which



    a)      One party agrees to purchase the financial interest that a second party has in a business

    following the second party’s death.



    b)      The second party agrees to direct his estate to sell his interest in the business to the

    purchasing party.


  • April 5, 2014 1:53 PM IST


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