Running a business means other people depend on you — not just your family, but your partners, employees, and customers too. Life insurance can protect all of them if something happens to you.
As a business owner, you’ll likely need more than one policy: one to take care of your loved ones and another to safeguard your company. Here’s how both work, and why every entrepreneur should have a plan in place.
Personal life insurance for business owners
Your family’s financial security shouldn’t depend on your company’s success. A personal term life or whole life insurance policy ensures your loved ones have a financial safety net if you die unexpectedly.
Why it matters
Unlike employees, business owners don’t always have built-in benefits like group life insurance, disability insurance, or a 401(k). A personal term or whole life policy can replace your income, cover family expenses, and pay off personal or business-backed debts.
What your policy should cover
Think about both personal and business obligations when you calculate your coverage amount:
Household expenses and mortgage
Childcare and college costs
Loans you personally guaranteed for the business
Your spouse’s life insurance or retirement savings
Any other debts tied to your name
Learn more >> How much life insurance you need
Key person insurance: Protecting your company
If your company depends on you or another key employee to function, key person insurance can keep operations running — or buy time to regroup — if that person passes away.
With this type of policy:
The business owns the coverage and pays the premiums.
The business is the beneficiary and receives the payout.
The death benefit can cover expenses like:
Paying off loans or replacing lost revenue
Recruiting and training a new hire
Offering severance to staff if the business closes
Learn more >> Corporate-owned life insurance
Buy-sell agreements: Protecting your partners
If your business has multiple owners, a buy-sell agreement outlines what happens if one of you dies or leaves the company. Pairing it with life insurance makes that plan financially possible.
How it works
The life insurance funds a buyout so ownership can transfer smoothly — without dipping into company reserves or taking on new debt.
There are two main structures:
Cross-purchase agreements
Each partner owns a life insurance policy on the others. If one dies, the surviving partners use the death benefit to buy the deceased’s share of the business.
Entity purchase plans
The business itself owns the policies and uses the payout to buy back the deceased owner’s shares.
Either approach prevents forced sales, protects the company’s value, and provides continuity for employees and clients.
How to buy life insurance as a business owner
Buying coverage is easier than you might think — and in most cases, you can apply for both personal and business policies at the same time with a licensed Policygenius agent.
Steps to get started
Determine your needs. You may need more than one policy — for example, a whole life policy for family protection and a key person or buy-sell policy for your business.
Compare quotes from Policygenius. Rates can vary depending on the insurer and your business type.
Apply and take a free medical exam. Think of it as a quick, complimentary health check — not a hurdle.
Get approved and sign your policy. Once in force, you’ll have peace of mind knowing your family and your company are protected.
The difference is that for many business owners, you need multiple life insurance policies to adequately protect your business and your family. A Policygenius agent can help you manage the application process.
Ready to get started? Compare life insurance quotes.
Why life insurance matters for business owners
Your business may be your legacy, but your family, partners, and employees rely on you right now. Life insurance makes sure your sudden absence doesn’t create a financial crisis for them.
“If you’re involved in the day-to-day operations of the business, it can be very hard to replace the value of a business owner without compensation,” says Levi Sanchez, CFP and founder of Millennial Wealth, LLC.
With the right policies in place, you can:
Keep your business running without interruption
Protect employees’ livelihoods
Provide liquidity for your family and estate
Transfer ownership smoothly to partners or heirs
Common questions about business life insurance
Do I need both personal and business life insurance?
Most business owners do. Personal life insurance protects your family’s finances; business life insurance protects your company’s future.
Can my business pay for my life insurance?
Yes — if it’s a business-owned policy like key person insurance or a buy-sell agreement. Talk to a tax advisor about any implications before setting this up.
Learn more >> Life insurance for CEOs and company executives
Is life insurance tax-deductible for my business?
Generally, life insurance premiums aren’t tax-deductible. However, the death benefit is typically tax-free, and policies can be structured to support long-term estate planning goals.
What type of life insurance is best for business owners?
It depends on your goals. Term life is affordable and works well for income replacement or buy-sell funding. Whole or universal life can build cash value for future liquidity or estate planning.
Learn more >> Best life insurance companies
The bottom line
Running a business means balancing today’s needs with tomorrow’s risks. Life insurance gives you — and everyone who depends on you — the confidence that your company and your loved ones will be okay, no matter what happens.
You don’t have to figure it out alone. Talk to a licensed Policygenius expert — our agents don’t earn commissions, so their only goal is to help you find the right coverage for your business and your family.
