Risk Management Services
Business Risk Planning
Business owners face a unique layer of financial risk that most personal financial plans completely ignore. The loss of a key person, an unplanned partner exit, or an ownership transition without a succession plan can destroy in months what took decades to build.
72%
Family businesses that fail at generational transfer
$0
Value recovered from businesses with no succession plan
50%+
Business owners with no buy-sell agreement
24 Mo
Typical BOE policy benefit period
Key Person Risk
The sudden death or disability of an owner, founder, or critical employee can paralyze operations, trigger loan covenants, and destroy enterprise value. Key person insurance provides immediate capital to stabilize the business, recruit replacements, and reassure lenders and customers.
Key Person Life Insurance
A life insurance policy owned by the business on a key employee or owner. Death benefit paid to the company — used to cover lost revenue, recruitment costs, loan repayment, and business stabilization.
Key Person Disability Insurance
Provides monthly benefits to the business if a key person becomes disabled and cannot perform their role. Covers the cost of replacement talent and revenue disruption during the transition.
Revenue-Based Coverage
Coverage amount calibrated to the key person's contribution to revenue — typically 5–10× their annual compensation — ensuring sufficient capital to absorb the financial impact of their loss.
Buy-Sell Agreement Funding
A buy-sell agreement obligates surviving owners to purchase a deceased or disabled partner's interest at a predetermined price. Without insurance funding, the surviving owners must come up with the purchase price from personal funds — or accept the deceased's heirs as new business partners. Life and disability insurance fund the buyout automatically.
Cross-Purchase Agreement
Each owner purchases insurance on the other(s). Simple in 2-owner situations. Upon death or disability, the surviving owner uses the insurance proceeds to buy out the deceased's estate.
Entity Purchase (Stock Redemption)
The business entity owns and is beneficiary of policies on each owner. Upon a triggering event, the business buys back the departing owner's shares using insurance proceeds.
Disability Buy-Sell Insurance
If a partner becomes permanently disabled, this policy provides the lump-sum capital needed to execute the buy-sell agreement — avoiding prolonged co-ownership with a non-contributing partner.
Business Overhead Expense (BOE)
A business owner who becomes disabled faces a dual financial crisis: lost personal income AND ongoing fixed business costs. Business Overhead Expense insurance covers rent, employee salaries, utilities, equipment leases, insurance premiums, and loan payments while the owner is unable to work.
BOE Policy Structure
Monthly benefit pays documented fixed business expenses. Benefit period typically 12–24 months — providing time to either recover or arrange an orderly transition.
Tax Deductibility
Unlike personal disability insurance, BOE premiums are tax-deductible to the business. Benefits received are taxable (offset by deductible business expenses paid with those benefits).
Integration with Personal DI
BOE is separate from personal disability insurance — it covers the business, not the owner's personal income. Owners need both layers for complete protection.
Executive Compensation & Retention
Attracting and retaining key executives requires competitive compensation packages. Life insurance-based executive benefit plans — split-dollar arrangements, executive bonus plans, and deferred compensation structures — provide tax-advantaged benefits that create powerful retention incentives.
Executive Bonus Plan (Section 162)
The business bonuses the executive the premium on a personally owned life insurance policy. The bonus is deductible to the business, taxable to the executive, and builds cash value the executive can access.
Split-Dollar Life Insurance
Business and executive share the cost and benefits of a life insurance policy. Allows the company to provide valuable benefits while recouping its premium investment at the executive's death or policy surrender.
Deferred Compensation Plan (NQDC)
Non-qualified deferred compensation plans allow executives to defer income to a future date — funded with cash value life insurance to informally pre-fund the obligation on a tax-advantaged basis.
Succession Planning Risk
Most business owners want to eventually exit — whether to family, co-owners, or third parties. Without a documented succession plan, the exit is typically reactive and value-destructive. Life insurance plays a central role in funding nearly every succession scenario.
Family Succession Planning
Transferring business ownership to children while equalizing inheritance for non-participating heirs is one of the most complex planning challenges. Life insurance can create inheritance equivalency for non-business heirs.
Management Buyout (MBO)
Key employees purchase the business from the founder using a combination of seller financing, SBA loans, and insurance-funded equity. The founder's exit is protected even if the business is not sold to an outside party.
Third-Party Sale Preparation
Reducing key-person dependency — through documented processes, management depth, and long-term contracts — materially increases enterprise value and broadens the pool of qualified buyers.
Protect Your Business
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We'll identify the risks that could destroy your business — and design insurance and succession strategies that protect everything you've built.
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Have questions about this topic or how it applies to your financial situation? Our team is available to provide personalized guidance.