If your business is a partnership between 2 or more owners, this will be important to you.

What happens if your business partner dies? What happens to their shares of the business? Do those shares become part of their estate, and get inherited by their spouse or children? Does that spouse or child have the same amount of expertise in the business that your partner had? Will they provide the same value?

Most businesspeople recognize they need to BUY the shares of a business partner if they die. But what happens if:

• your business is new, and you haven’t generated anough profit to be able to buy out a business partner?
• your capital is tied up in inventory or investments?
• you have other plans for the money in your bank account?

Life Insurance can provide the money for a Buy-out.

The policy can be owned by the company, and the company becomes the beneficiary of the policy. That way you can write off the premiums on the policy as a business expense on your corporate tax return.

If you need to collect on the policy, the death benefit pays into the Capital Dividend account of the corporation, and can then be used to buy out the shares of the partner who passed away.

A Term Life policy is an inexpensive way to fund the Buy/Sell provision contained within your Partnership Agreement.