Buy-sell insurance is the life and disability coverage specifically purchased to fund obligations under a buy-sell agreement when an owner dies or becomes disabled. Policies are typically permanent or term life insurance on each owner and disability buyout coverage where available. The purpose is to create timely liquidity so the remaining owners or the entity can purchase the departing ownerTMs interest at the agreed price without draining business cash flow or relying on emergency loans. Properly structured buy-sell insurance aligns ownersTM economic interests, protects families, and helps ensure that a carefully drafted agreement functions in the real world.

Advisors design buy-sell insurance by selecting policy types, face amounts, ownership structures, and premium funding methods consistent with the underlying agreement. They coordinate medical underwriting, financial justification, and multi-life discounts where available. During reviews, advisors adjust coverage as company value and owner circumstances change, avoiding underfunded agreements. Education focuses on explaining to owners why buy-sell insurance is not optional: without it, surviving owners or heirs may be forced into distressed sales or long-term payout arrangements. Understanding buy-sell insurance allows advisors to integrate coverage seamlessly into broader business-succession planning.