PolicySolutionsWhen you are the business, coverage protects both.
You don't have an employer's group plan, and the company leans on you more than anyone. Life insurance does double duty here — it protects your family and keeps the business you built from unraveling if something happens to you. Structured right, one strategy covers your household, your partners, and your lenders. That's the conversation we have with owners, at no cost to you.
In short: For an owner, life insurance does two jobs at once — protecting your family and keeping the business intact. It can fund a buy-sell agreement between partners, cover a key person the company depends on, or back a business loan, on top of personal coverage. How the policy is structured and owned matters, so it's worth setting up with someone who handles both sides.
You're covering everyone but the business.
Most owners carry personal coverage and stop there — leaving the company, the partners, and the loan exposed.
Of private-industry workers at firms with fewer than 100 employees have access to employer life insurance at all — and a group plan covers employees, not the business's exposure if the owner is lost.
— U.S. Bureau of Labor Statistics, Employee Benefits in the United States, March 2025 (Table 5)Small businesses operate in the U.S. — the overwhelming majority with no employer group life plan behind the owner.
— U.S. Small Business Administration, Office of Advocacy (2026 FAQ)Self-employed workers in the U.S. — incorporated and unincorporated — carrying their income with no employer safety net.
— U.S. Bureau of Labor StatisticsFour jobs — most owners only think of the first.
Personal protection is the start. For an owner, coverage also protects the company itself.
Protect your family
The personal policy every earner needs — replace your income, clear debts, keep your household whole. This is the foundation; the three below build on it.
Insure a key person
A policy the business owns on you or an essential employee. If that person is lost, the payout gives the company cash to survive the disruption — cover lost revenue, recruit a replacement, and reassure lenders and clients.
Fund a buy-sell agreement
If you have partners, life insurance funds the buyout when one owner dies — the survivors buy the share at a pre-agreed value, so the business stays in the right hands and the family gets a fair, liquid payout instead of a stuck stake.
Back a business loan
Many lenders require or prefer life insurance as collateral on a business loan or SBA financing. Coverage assigned to the debt means your death doesn't put the loan — or your co-signers — at risk.
Tax note: premiums on business-beneficiary policies (key person, buy-sell) are generally not deductible (IRC §264(a)(1)). Where the business owns the policy and is the beneficiary — key person, and entity-purchase or redemption buy-sell — the contract is an employer-owned life insurance contract under IRC §101(j)(3), so the death benefit is generally received income-tax-free only if the notice-and-consent requirements of IRC §101(j)(4) were satisfied in writing before the policy was issued and a §101(j)(2) exception is also met. Without them, the exclusion is capped at the premiums paid and the rest is taxable to the business (IRC §101(j)(1)); employer-owned contracts also carry annual reporting on Form 8925. A cross-purchase buy-sell, where the individual co-owners own the policies on each other, is generally not an employer-owned contract and is not subject to §101(j). Structure and ownership drive the details — confirm with your CPA or tax attorney.
Sizing coverage on the person the company can't lose.
The business owns the policy, pays the premium, and is the beneficiary. The hard part isn't the structure — it's deciding how much a key person is actually worth to the company.
Multiple-of-compensation
The simplest starting point: a multiple of the key person's salary and benefits. Quick to calculate and easy for a lender to understand, though it can understate the value of an owner whose relationships or expertise drive far more than their paycheck.
Contribution-to-earnings
Estimates the share of company profit that traces to this person, then covers the years it would take to replace it. More work, but it captures an owner or rainmaker whose real value dwarfs their salary.
Replacement cost
What it would actually cost to recruit, hire, and ramp a replacement — search fees, lost momentum, and the revenue that slips while the seat is empty. Often the most honest number for a hard-to-replace role.
Same idea as personal need
The logic mirrors sizing a household policy — you're replacing what would be lost. Our coverage-needs approach translates directly: quantify the gap, then insure it.
Cross-purchase vs. entity-purchase — the structure matters.
A buy-sell agreement decides who buys a departing owner's share and at what price. Life insurance provides the cash. How you own those policies changes the tax and administrative picture.
Cross-purchase
Each owner buys and owns a policy on every other owner. When one dies, the survivors use their policy proceeds to buy the share directly. It can offer a favorable cost basis for the surviving owners, but the number of policies grows quickly as owners are added — three owners already means six policies.
Entity-purchase (stock redemption)
The business itself owns one policy per owner and buys back the deceased owner's share. Far simpler to administer — one policy per owner regardless of headcount — which is why larger ownership groups often prefer it. The basis and tax treatment differ from cross-purchase, so it's a CPA conversation.
Pinning down the price
A buy-sell is only as good as its valuation. Owners commonly set a fixed agreed value updated periodically, a formula (a multiple of earnings or book value), or a required independent appraisal at the time of a triggering event. Whichever you choose, the coverage should track the value so it doesn't fall short.
Keep it current
A valuation set years ago and never revisited is the most common failure we see. As the business grows, the agreed value — and the coverage funding it — should be reviewed so the payout still buys the share it's meant to.
Collateral requirements and COLI.
Two more places coverage does business work — backing the debt you borrowed and, for some companies, insuring a broader group of employees.
Business-loan collateral
Many lenders want life insurance assigned as collateral before they'll extend a business loan, so your death doesn't leave the debt — or a co-signer — exposed. A collateral assignment directs enough of the death benefit to pay off the outstanding balance, with any remainder going to your named beneficiary.
SBA loan requirements
SBA-backed financing frequently requires life insurance on the primary owner, especially for sole proprietors or single-owner entities where the business depends heavily on one person. The lender typically wants coverage assigned for the loan term; term life is usually the efficient way to satisfy it without overpaying.
COLI (company-owned life insurance)
Larger or established businesses sometimes hold company-owned life insurance on a broader group of employees to fund benefit obligations or offset the cost of losing talent. COLI has specific IRS notice-and-consent rules (under IRC §101(j)) that must be followed for the death benefit to stay tax-favored — squarely a CPA and attorney matter.
Where it meets estate planning
For many owners the business is the estate, so business coverage and personal estate planning should be designed together — funding a buyout, equalizing inheritances among heirs, and keeping the whole picture liquid.
Tax and legal treatment of key-person, buy-sell, collateral, and COLI arrangements depends on how each is structured and owned. This is general information, not tax or legal advice — confirm the specifics with your CPA or attorney.
No group plan means no safety net — unless you build one.
Consultants, contractors, real-estate agents, rideshare and delivery drivers, creators, sole proprietors: your income has no employer backstop.
You're the whole plan
There's no HR department quietly covering you. If someone depends on your income, the only life insurance you have is the one you buy — so this is more urgent for the self-employed, not less.
Term is the efficient base
For most self-employed people, term life buys the most protection for the lowest premium — and it's typically affordable for someone healthy. You own it, so it follows you across clients, gigs, and good years and lean ones.
Irregular income, handled
Variable earnings don't disqualify you. We size coverage to your real obligations and household need, and match you to carriers comfortable with self-employment income.
Room to build later
Once the protection base is set, permanent coverage (whole life or IUL) can layer in for tax-advantaged cash value or retirement goals — useful when you don't have a company 401(k). See IUL →
Business owner life insurance — frequently asked questions
What is key person life insurance?
A policy the business owns on an owner or essential employee, with the business as beneficiary. If that person dies, the payout gives the company cash to survive the disruption — replace lost revenue, recruit, and reassure lenders and clients. It's sized to what losing that person would actually cost.
How does life insurance fund a buy-sell agreement?
Co-owners agree that if one dies, the others (or the business) buy their share. Each owner is insured, and the death benefit provides the cash to buy the deceased owner's stake at a pre-agreed value — keeping the business with the survivors and giving the family a fair, liquid payout.
Do self-employed and 1099 workers need coverage?
Often more than most — no employer group plan means no safety net for anyone who depends on your income. Term life is usually the efficient base and is typically affordable for a healthy self-employed person. You own the policy, so it moves with you.
Can my business deduct the premiums?
Generally no — premiums on a business-beneficiary policy (key person, buy-sell) are typically not deductible. Where the business owns the policy and is the beneficiary, it is an employer-owned contract under IRC §101(j)(3), and the death benefit is generally received income-tax-free only if the pre-issue notice-and-consent requirements of IRC §101(j)(4) were met in writing before the policy was issued and a §101(j)(2) exception is also met; without them, the exclusion is capped at premiums paid and the excess is taxable to the business. A cross-purchase buy-sell owned by the individual co-owners is generally not an employer-owned contract and is not subject to §101(j). It depends on structure and ownership, so confirm with your CPA or tax attorney.
Does an agent cost my business anything?
No. A licensed independent agent is paid by the carrier and your premium is the same as going direct. For business cases, comparing carriers and structuring the policy correctly is exactly where an independent specialist earns their keep — at no cost to you.
Protect what you built — and who's counting on it.
A licensed independent specialist (NPN #20612303) will map coverage to your family, your partners, and your lenders, and compare carriers — at no cost to you.
No call-center pile-on. Here's exactly what to expect.
You reached out, so a real licensed agent picks it up — not a rotating call center, and never a sale you don't need.
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A licensed agent reaches out
We aim to reach you the same business day — someone licensed where you live, who answers your questions straight.
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A few honest questions
Enough to understand your situation and match you to the partner carrier that treats it most favorably. If it isn't a fit, we'll tell you.
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Real options — your call
We compare carriers and show you what actually fits. No pressure, no obligation; you decide if and when.
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Covered, with a safety net
If you move forward, a free-look period lets you review the real policy and change your mind for a full refund — a limited window that starts when the policy is delivered to you. Most states set a minimum length; where a state sets none, the window your insurer prints on the policy controls.
Realistic timelines: approval times vary by product and by carrier. Policies underwritten from health questions alone are typically much faster. Fully underwritten policies take longer — they require a medical exam and a records review. Your agent will tell you which path your application is on and what to expect. Any estimate you see online is a ballpark. Your real rate comes from a licensed agent comparing carriers for your exact age and health.