What happens to your business if a partner dies tomorrow?
A buy-sell agreement funded with life insurance sets the price and the cash source today — so a death never forces a fire sale, a lawsuit, or your partner's family in the owner's seat.
Why a buy-sell agreement matters
A buy-sell agreement is a legally binding contract between co-owners that decides — in advance — what happens to an owner's share when they die, become disabled, retire, or leave. Without one, state default rules and probate decide for you.
- Set a fair price for each owner's share before emotions are involved
- Guarantee buyers for every share — no outside investors or competitors stepping in
- Give the family immediate cash instead of an illiquid ownership stake
- Keep control of the business with the remaining owners
- Avoid forced sales, co-owner disputes, and probate delays
Funded with life insurance
A policy on each owner puts the full purchase price in cash at the moment it's needed — for pennies on the dollar compared to a savings plan.
The price is set in advance
The agreement fixes a formula or appraisal method for valuing each owner's share, so there's nothing to argue about later.
Built on A+ rated carriers
We shop the coverage that funds your agreement among A+ rated carriers, and keep it in step with the business as it grows.
Two ways to structure it
Both structures accomplish the same goal — they differ in who owns the policies and who buys the departing owner's share. We'll help you weigh them with your attorney and CPA.
| Feature | Cross-purchase | Entity purchase |
|---|---|---|
| Policy owner | Each owner insures each other owner | The business insures each owner |
| Who buys the share | The remaining owners personally | The business itself |
| Best when | Few owners (2–3) and simple ownership | Many owners or unequal ownership stakes |
| Tax note | Heirs receive a stepped-up basis | May carry corporate alternative minimum tax implications |
Tikvah Advisors does not provide legal or tax advice. Your buy-sell agreement should be drafted or reviewed by an attorney and coordinated with your tax advisor.
How a buy-sell agreement works
A short, animated walkthrough — what happens without an agreement, how life insurance funds the purchase price, and the two ways to structure the agreement.
Tikvah Advisors does not provide legal or tax advice. Your buy-sell agreement should be drafted or reviewed by an attorney and coordinated with your tax advisor.
Is a funded buy-sell agreement right for you?
- Co-owned business — partners, spouses, or family members
- Owners who rely on the business for their livelihood
- Owners with different plans: one wants to stay, one wants out
- Anyone whose family couldn't buy or run the business alone
- Key person coverage on essential employees
- Disability buy-out provisions for long-term illness
- An IUL or term policy matched to the purchase price
- Regular reviews as the business value grows
Protect the business you built together
A licensed agent will show you what it costs to fund your buy-sell agreement with life insurance — free, no obligation. Call 678-787-0823.