What happens to a business should the owner die unexpectedly? There are expenses to cover and stocks to reallocate. As a business owner, life insurance can provide the answer to these tricky conundrums.
Stock Redemption Plan
When a business owner dies, how can the stocks be reallocated to other stockholders? A life insurance policy can solve this problem. Upon the owner’s death, the payout from the policy buys out the owner’s shares. The shares are then purchased by the remaining stockholders, new stockholders or a combination of the two. The beneficiaries of the owner’s will receive the cash immediately and the stocks continue to exist in new hands.
Paying Off Debts
When a business owner dies unexpectedly, the beneficiaries to his or her will may be clueless as to how to take care of the business expenses that the owner normally would have handled. For example, perhaps a shipment of product has recently arrived and it isn’t clear how to sell that product to recoup the expense. A life insurance policy can provide a lump sum of cash to pay for business expenses so family, friends, or stockholders don’t have to figure out a strategy.
A life insurance policy can provide an immediate solution to problems in case the business owner dies suddenly.