Small-business owners have big plans for the future. Whether those plans include successfully transitioning the company to the next generation or attracting and retaining the talent that the company needs to grow, small-business life insurance can help.
Want help navigating life insurance?
Talk with one of our life insurance specialists today. Call 1-855-472-2959.
Having a succession plan can help ensure that the business carries on if the owners retire or are unable to manage it themselves in the future.
Life insurance isn’t just personal — it can also be a smart business tool. For small-business owners, it can help cover debts such as loans or leases, easing the burden on your family if something were to happen to you. It can also be crucial for creating a smooth transition to a partner or for keeping your business running and supporting employees during unexpected crises.
While there are many different ways that life insurance can be used to secure your financial future and protect the business you’ve worked so hard to build, a few common strategies are:
If you have a business partner, you may want to consider purchasing a buy/sell agreement. In this arrangement, you and your business partner will own policies covering each other’s lives. If the first business partner passes away, the other receives a death benefit that can be used to buy the remaining half of the business. This results in a cash payment to the deceased’s family, as well as security for your business to continue operating.
| Pros | Cons |
|---|---|
| Prevents disputes over ownership after a partner’s passing | Requires careful negotiation and legal setup upfront |
| Guarantees a fair value for the departing partner’s share | Premium costs depend on the size of each owner’s stake |
| Protects the business’s continuity | Unsuitable for sole proprietors or single-member LLCs |
Key person insurance is a death benefit that can help your business cover financial losses if you or another hard-to-replace employee were to pass away. In this situation, the death benefit can go toward looking for a replacement for the key employee, making up any lost costs or, if the company shuts down, paying off any debts or severance packages.
| Pros | Cons |
|---|---|
| Helps keep operations afloat during a difficult time | Can be expensive for businesses with multiple “key” people |
| Provides financial breathing room to find a replacement | Payout is only for the company, not the individual’s family |
| Improves the business’s financial credibility with lenders and investors | Requires regular reviews as key roles may shift over time |
Group life insurance is a cost-effective way to offer employees coverage under a single plan, which can also include you as the business owner. It's a great option for teams of any size and shows employees that you care about their well-being both personally and professionally.
| Pros | Cons |
|---|---|
| Helps attract and retain talent by offering a competitive benefits package | Limited coverage compared with individual plans |
| Premiums are usually lower than with stand-alone policies | Employees lose coverage if they leave the company |
| Quick and easy to set up through group providers | Not tailored to specific business-related needs, such as succession planning |
Life insurance can be a key part of business succession planning, which can help keep your business running smoothly during times of transition. But having a plan in place can also help improve your business's financial credibility with lenders and investors, making it easier to secure funding and support.
This can be especially important for minority-owned businesses:
40%
The gap in funding rates between male- and female-owned businesses2
37%
of Black business owners had difficulty accessing new capital and financing3
Our customizable life insurance solutions have clear cost structures and a streamlined process, making it easier for you to meet your financial needs with confidence.
You should consider both your personal and business needs. Calculate enough coverage to replace your income, pay off business debts and provide for your family's future. Our coverage calculation guide can help you determine the right amount.
It's best to get life insurance early, as premiums are lower when you're younger and healthier. This can help you lock in a more affordable rate.
If your business changes, such as through growth or restructuring, you may need to adjust your coverage. Review your policy regularly to ensure that it meets your current needs.
No, once your policy is active, your premiums remain the same throughout the term, even if your health changes.
[1] “PwC's 2023 US Family Business Survey," pwc.com (May 16, 2023).
[2] “Women in Business Statistics in 2025 (Latest U.S. Data),” Noah Brandt, Ecommerce tips (March 11, 2025).
[3] “Reports Show Black Small Businesses Still Face Major Challenges,” Rieva Lesonsky, Forbes (Feb. 20, 2023).