The Business “Prenup”: Why Business Partners Need Life Insurance in February
The Business “Prenup”: Why Business Partners Need Life Insurance in February
In the wake of Valentine’s Day, we often think about personal partnerships, but for business owners, the relationship with a business partner is just as critical. If you own a company with someone else, what happens to the business if they pass away tomorrow?
Without a Buy-Sell Agreement funded by Life Insurance, you might suddenly find yourself in business with your partner’s spouse or heirs—people who may have no interest or skill in running the company.
How it Works
A Buy-Sell agreement is a legal contract that stipulates that if a partner dies, the surviving partner has the right to buy out the deceased partner’s shares at a pre-set price. Life insurance provides the cash to make that purchase. It’s the ultimate “Business Prenup,” ensuring that the business stays stable and the deceased partner’s family is fairly compensated.
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