What are the basic facts about why life insurance may be used by business owners?
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UPDATED: Jul 16, 2021
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For sole proprietorships, partnerships and closely held corporations the death of a general partner can result in dissolution of the firm. If this occurs, the surviving partners and the estate of the deceased may need to reach agreement about the disposition of the business.
This can result in forced sale, liquidation of assets, and depletion of value. Buying out the interests of the deceased partner and continuing the business may not be easy to arrange at such a time and the financing may not be available.
The solution is to have a previously arranged buy and sell agreement.