Explanation
Businesses use life insurance to protect against revenue disruption when a critical owner or executive dies. Proper structuring supports continuity planning and can stabilize financing relationships.
Example
A firm insures a founder whose relationships drive sales. If death occurs, proceeds can offset transition costs and maintain operations while leadership is restructured.
Common mistakes
A common issue is unclear ownership and setup between the company and shareholders, creating disputes during claim events.
Summary
Business coverage must align policy ownership, direction, and continuity objectives.