1. What problem needs to be funded?
A shareholder’s death can create a buyout need, debt repayment, key-person loss, estate liquidity need, or several of these at once. The amount and type of protection should begin with that specific problem.
2. Who should own the policy?
Personal and corporate ownership create different premium flows, objectives and consequences. The structure should be reviewed with the appropriate professionals before implementation.
3. How long does the need really last?
A need tied to debt or a growth period may be temporary. A succession or estate-liquidity objective may be much longer. Mixing those horizons can lead to an inefficient solution.
4 to 7. Liquidity, agreements, succession and review
Also ask how protection fits with shareholder agreements, succession planning, business liquidity and ongoing review. A policy is only one part of the plan.
Frequently asked questions
Is corporate life insurance suitable for every business?
No. It should address a real need and be evaluated in the context of the company’s structure and objectives.
Why review the shareholder agreement?
Because the legal buyout mechanics and the funding strategy should work together.