Life Insurance for Businesses
Did you know you can protect your business with life insurance in Massachusetts and Boston? Make sure your business and small business in Massachusetts has a life insurance policy that is suitable including key man life insurance for your top level employees. Below you’ll find more information on how you can be covered and your available options.
The Basics of Business Life Insurance
Life Insurance can be used in business as a form of protection, as well as a group benefit for employees. The following are some of the uses of Life Insurance:
Buy/Sell Agreement Funding
In this situation, the sole proprietor, partner, or small business owner may arrange for the sale of his/her business from the estate to a designated buyer by means of a buy-sell agreement. This is a binding contract for the buyer to purchase the business and it obligates the estate to sell the business to that buyer. Since the proprietor binds that his estate sells the business at his death, proceeds from a life insurance policy, paid for and taken out by the buyer on the life of the seller, will be paid to the estate, and subsequently, the money will be used by the buyer to purchase the business.
Key Person Insurance
This type of policy is taken out on the life of an employee, who’s death would have a negative impact on the business economically. If a company endures this type of situation, an insurance policy would pay the business a death benefit, upon the death of the key employee, and that money would be used to find an appropriate replacement and train that person accordingly. In a partnership or small business, this type of policy can keep a business afloat as they scramble to find someone to replace the key employee.
Group Life Insurance
Life Insurance is used as a benefit to employees of a company. Each eligible employee receives a Life Insurance Policy at a group rate. Group life insurance is usually comprised of term life insurance that terminates when the employee leaves the company. This benefit can aid in attracting employees, for life insurance is something that everyone needs if they have liabilities to protect. Therefore, a group policy, at work, can help an employee’s family, upon death of the employee.