Key Person Coverage. In the event insurance is being implemented to fund a cross-purchase or stock-redemption buy-sell, dont forget to suggest that the business also own key person coverage to help provide a critical shock absorber in the event of the death of an owner.
Business sold during lifetime. One concept which can be very valuable for a buyout that is stretched out over a period of time is to require there to be an amount of life insurance, funded by the buyers, payable to the sellers family in the event of the sellers premature death. This completes the transaction at the sellers death and removes the need for an ongoing business relationship with parties among whom there was initially no relationship. For this purpose, and especially under the clarity provided by Notice 2002-8, endorsement split dollar can be a wonderful fit.
Reproduced from National Underwriter Life & Health/Financial Services Edition, February 11, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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