A Quick Guide to Commercial Life Insurance
Commercial life insurance helps businesses protect against the financial loss caused by the death of key individuals. Unlike personal life insurance, these policies are owned by the business, which also pays the premiums and receives the benefits.
Common Types of Commercial Life Insurance
Key Person Insurance: Covers vital employees or executives; helps offset lost revenue or recruitment costs after their death.
Buy-Sell Agreement Insurance: Ensures surviving business partners can buy out a deceased partner’s share.
Group Life Insurance: Offered to employees as part of benefits packages to improve retention and morale.
Loan Protection Insurance: Ensures business debts can be paid if a key person passes away.
Benefits
Ensures business continuity
Supports succession planning
Enhances financial security
Helps with employee recruitment and retention
May offer tax advantages
Key Considerations
Before purchasing, businesses should assess who needs coverage, the right policy type and amount, and potential legal/tax impacts.
Conclusion
Commercial life insurance is a smart tool for managing risk, protecting operations, and planning for the future. It’s especially important for companies reliant on key individuals or planning ownership transitions.
