Building a successful business requires dedication, commitment and hard work. Once a business is established, planning for business continuity or business succession becomes essential. This helps ensure a smooth transition in the management or ownership of the business and its continued success.


Business continuity planning addresses all possible scenarios that may affect a business or its owners, including retirement, the sale of business shares, disability or death. With sound planning, a company can ensure the funds will be available to provide flexibility in case of retirement, disability or death of a shareholder, or sale of the stake in the company by one of the owners. StateTrust Life & Annuities offers several life insurance products that can be customized to the succession planning needs of a business. Our Life Insurance products include:

Product Name Product Type Description
Lighthouse Term Life Insurance This life insurance plan 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 Return of Premium Term Life Insurance This life insurance plan 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 type of policy combines variable life insurance with universal life insurance. It is a popular product, since it provides insured parties with the flexibility to invest, while enjoying the benefits of insurance coverage. Our policy provides the ability to invest in the world's major capital markets and may be adapted to 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 Index 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.

Components of a business succession plan:

  • Objectives are clearly defined by the business shareholders or owners.
  • Identify measures to minimize business risk and protect the company's industry position and reputation.
  • A market appraisal of the business (preferably by an authorized third party).
  • A formal, written contract as the purchase-sale agreement that establishes plan guidelines.
  • Having established financing instruments in place, such as life insurance, to provide the necessary cash flow in case of death or disability, or the retirement of one of the owners.
  • Plan review/update process.

Reasons to consider business succession planning

  • Maintaining control of a company: Succession planning with a purchase-sale agreement allows business owners to maintain control of the business. Once the transfer of ownership becomes activated—due to death, disability or retirement—a succession agreement can ensure that the former owners' stake is made available to the successor(s) (or in the case of a single owner, to their chosen beneficiaries). This way, business ownership may be pre-determined without the intervention of family members or other parties.
  • Minimize Risk: Business planning addresses all potential business risks, such as the loss of a key employee, the death or disability of one of the owners, the valuation of the company, and the potential sale of the business along with all taxes related to the sale. Succession planning is necessary to mitigate risks and possible legal issues related to the transfer of business ownership.
  • Contingency Planning: Without any plans in place, the effects of sudden disability or death of a business owner could have catastrophic effects on any business. The use of a purchase-sale contract, which may be funded through a life insurance policy, may be helpful for a smoother transition. The purchase-sale agreement will provide a guide for the transfer of property, including a predetermined sale price.

Statistics on Business Succession:

  • On average, 45% of a business owner's net worth is tied to the business.
    (LIMRA International)
  • More than 50% of business owners want to pass their business onto the next generation.
    (Families in business, NFIB National Survey of Small Businesses)
  • Only 26% of all small business owners have some type of succession plan.
    (LIMRA International)
  • Less than 30% of family-owned businesses survive to the second generation, less than 12% make it to the third generation, and only 3% show survival rate in the fourth generation.
    (Family business review)