Executive & Business Owner Planning

Key person insurance is a life (and optionally disability) policy that the business owns on an essential employee or owner. If that person dies, the company receives a tax-free cash benefit to cover lost revenue, fund a replacement search, repay business loans, and keep operating during the transition. Every business with an irreplaceable person needs this.

• Key person valuation (income multiples, revenue contribution, cost-to-replace)
• Policy type selection
• Informal carrier inquiries before formal application
• Tax structure guidance in coordination with your CPA
• Coverage review at every Annual Benefits Review

A buy-sell agreement defines what happens when a triggering event occurs: death, disability, retirement, or exit. Without pre-funded life and disability insurance, a partner's death or disability can force a sale, create unwanted family co-owners, or trigger business liquidation.

Life and disability buy-out insurance creates the exact dollar amount needed at the exact moment it's needed.

1. Cross-purchase: each owner buys a policy on the other owners. Better for tax basis step-up at death. Best for 2–3 owners.
2. Entity purchase: the business buys policies on each owner. Simpler administration. Best for 4+ owners or when the company holds significant assets.
3. Disability buy-out insurance: statistically more likely than death for working-age owners, funds the purchase of a partner's business interest after extended disability.

Named after Section 162 of the Internal Revenue Code, this strategy lets the business pay a bonus to a selected key employee, and deduct that bonus as ordinary compensation, just like salary. The executive uses the bonus to pay premiums on a permanent life insurance policy they personally own. Zero ERISA. No IRS forms. No contribution limits. No nondiscrimination testing. 

• Business: Full tax deduction for the bonus amount in the year paid.
• Executive: A permanent life policy in their own name, with tax-deferred cash value growth and a tax-free death benefit.
• Fully portable: they keep it for life even if they leave.
• Cash value can be accessed at retirement as tax-advantaged supplemental income.

 A Restricted Executive Bonus Arrangement restricts the executive's cash value access until they've met a defined vesting period, retention power without ERISA complexity. A powerful tool for business owners who want to reward and retain top talent simultaneously.

If you become disabled, your personal disability insurance replaces your income, but what covers the business?

BOE disability pays your ongoing business expenses (rent, payroll, utilities, loan payments) during a disability, keeping the business operational while you recover.

Essential for sole proprietors and small business owners. 

Group disability plans cap coverage.

For owners and executives earning above those caps, individual high-limit DI plans provide meaningful income replacement with own-occupation definitions. This means you're considered disabled if you can't perform your specific occupation, even if you could theoretically do something else.