Key-Person Insurance vs. Buy-Sell Insurance
Both products use life insurance, but they fund different outcomes.
Mixing them up leaves either the company or the surviving owners short of cash.
Key takeaways
- 01
Key-person insurance is usually owned by the business. It helps replace earnings, hire, or keep the lights on after a critical death.
- 02
Buy-sell insurance funds the purchase of a deceased owner’s shares under a buy-sell agreement written by legal counsel.
- 03
Many companies need both: cash to run the business, and cash to buy out an estate so ownership stays with the remaining partners.
- 04
Stead Life helps owners size and place these policies and coordinates with the attorneys and tax pros who draft the agreements.
In this guide
- Key-person insurance is usually owned by the business
- Buy-sell insurance funds the purchase of a deceased owner’s shares under a buy-sell agreement written by legal counsel
- Many companies need both: cash to run the business
- Stead Life helps owners size and place these policies and coordinates with the attorneys and tax pros who draft the agreements
Recommended next step
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