Life insurance has been a valuable tool for business owners to reduce their risk and address issues related to maintaining and growing a successful business. Some common applications of life insurance for business owners include key individual insurance, financing of purchase agreements, estate planning, and serving as loan collateral.


Successful business owners use life insurance as a way to protect their business, as a financial tool for business succession, and as a way to save income for retirement in the future. With life insurance, business owners can ensure that funds will be available to provide flexibility to the various scenarios that could affect their business, including the loss of a key employee, death or disability of the owner, serve as collateral for a loan and potential tax liabilities.

Common applications for business owner insurance:

  • Life Insurance for key individual: For many small businesses, the owner is also the key employee. Life insurance can be purchased to obtain a benefit in case of death of the business owner. This helps protect the business in the event of an untimely death. Life insurance benefits can be used to hire a replacement, pay outstanding debts or help conduct an orderly liquidation of the company.
  • Collateral for a loan: Loans are essential for the expansion and growth of small businesses. Life insurance policies for business owners are commonly used as loan collateral. When you buy life insurance to guarantee a loan, the company owns the policy, pays the premiums and is the designated beneficiary.
  • Financing a Purchase Agreement: A purchase agreement is a legally binding contract that establishes that, as a consequence of the death, disability or retirement of an owner or member, their stake in the business must be offered to the partners who remain in the previously agreed terms.
  • Succession Planning: In many cases, most of the business owner's assets are tied to the company. Without an effective succession plan, including a succession plan for the business, the company could be sold or liquidated to pay any applicable taxes. With a life insurance policy, business owners can make sure benefits are paid out to their successors upon death. Successors can then use part of the benefit to pay for any taxes the company might owe.

StateTrust Life & Annuities offers several life insurance products that can be customized to the needs of business owners. Our Life Insurance products include:

Product Name Product Type Description
Lighthouse Term Life Insurance This life insurance product provides coverage with capped premiums during the life of the policy. This plan does not include an investment component, thus offering the insured amount at the lowest available cost.
Sentinel Term Life Insurance with Return of Premium This life insurance product provides coverage with capped premiums during the life of the policy. This policy will provide financial resources to your family in case of premature death. In addition, at the end of the coverage period, you will be reimbursed all premiums paid.
Legacy Variable Universal Life Insurance This policy combines variable life insurance with universal life insurance. It is a popular product, since it provides insured parties the flexibility to invest, while enjoying the benefits of insurance coverage. This policy provides the ability to invest in the world's major capital markets and may be adapted to your present and future protection and investment needs. This product protects both the inheritance and the family estate for succession planning purposes.
Compass Index Indexed Universal Life Insurance This policy provides the policyholder with insurance coverage, as well as an opportunity to allocate investments in the S&P500. It provides a guaranteed minimum return every 24 months (primary protection), and a share percentage in this index's growth.
Global Dynamic Protection Indexed Universal Life Insurance A universal indexed life insurance plan with flexible premiums, which combines the protection of a life insurance policy with an investment component.