Life insurance protection should be considered any time that the the death of the principle of a business, whether the CEO, President, CFO, major shareholder or partner would have a major impact or cause some kind of financial chaos upon their death. We’ve talked a lot a times about how a position seemingly as small as the head of distribution in a company is so critical to the reputation and performance of a company that they should be considered and treated as key persons. Key person life insurance ensures that the company is financially able to weather the trauma of losing and replacing someone who is critical to the company. It gives time to train and/or time to recruit and replace a person for that position.
There is just no way to understate the importance of the financial stability of a business life insurance plan when it comes to positions like the CEO and CFO of companies. Your customers assume stability in these positions. They expect it and deserve it and in the case of a death they expect and deserve a replacement of equal caliber in a timely fashion. I know life insurance doesn’t create a perfect business world where a seamless turnover of power just happens, but it does help creditors and large customers to calm nerves and know that the company has a business life insurance plan in place for just this situation. It could be that the life insurance will never be needed.
There is probably no more clear need for life insurance than a partnership buy/sell. Law clearly spells out that in a partnership if one partner dies, the other has two options. They can let a member of the deceased’s family take over the empty position, or they can buy out that position. Let me state two things clearly here. The chances that you really want a replacement from the family taking over that position is very unlikely. Partnerships that work are a rare business entity indeed and the only thing that would be more rare is a partnership born out of necessity. The best option really comes when both partners have the life insurance available to simply write a check buying out the other partner’s family at a predetermined amount.
Bottom line. There’s nothing quite like a business plan to make the unforeseen workable and survivable. The perfect plan is when nothing goes wrong. The other perfect plan is when you’ve planned for things when perfect doesn’t happen. If you have questions or want to know if a business life insurance plan is right for you, call or email me directly. My name is Ed Hinerman. Let’s talk.