Keyman life insurance is insurance purchased by a business on the life of an owner or employee whose services contribute substantially to the success of the business. The company is the owner, the premium payer and the beneficiary of the policy. The objective of Keyman Insurance is to indemnify an organization against the monetary loss resulting from the death of a key employee.
A properly executed and funded buy-sell agreement is the ideal solution to the thorny problems incurred by a partner's death, unless the shares pass to each other in a Will. The buy-sell agreement should be drawn by lawyers and such agreements generally contain the following commitments:
Life Insurance is the best way. It guarantees the full purchase price. At the partners death, the proceeds are paid to the surviving partner(s) by the life insurance company and the partner or partnership uses the money to buy the deceased's share. The number of policies = the number of partners.