Common uses of business uses of life insurance
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Buy-sell agreement or Business continuation agreement
a legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled.
Types of buy-sell agreements for partnerships and corporatons
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Cross Purchase
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Entity Purchase
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Stock Purchase
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Stock Redemption
used when the corporation buys one policy on each shareholder
Key employee is insured, the business is all of the following
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Key person life insurance
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Executive Bous
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Corporate-owned life insurance (COLI)
-policy is owned by the corporation and payable to the corporation
-purchased on the lives of the employees
-employer provides post-retirement benefits to the employees and are tax deductible to the employer
-corporation receives death benefits tax free
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