A limited liability company, or LLC, is a flexible business entity that combines limited liability protection for its owners with pass through taxation features similar to a partnership or sole proprietorship, unless otherwise elected. Owners, called members, are generally not personally responsible for business debts and liabilities beyond their investment, assuming proper formalities are followed. LLCs are widely used for operating businesses, professional practices, and holding investment or real estate properties. In life insurance and estate planning, LLCs often serve as ownership vehicles for policies, closely held business interests, or family investment portfolios to manage control, creditor protection, and succession.

In everyday planning, advisors encounter LLCs when structuring buy sell agreements, key person coverage, or wealth transfer strategies. An operating business organized as an LLC may own policies on members for key person protection or buyout funding, while a family LLC may hold investment assets and sometimes life insurance as part of a centralized wealth holding structure. Advisors coordinate with attorneys to ensure that operating agreements address how policies are owned, how premiums are funded, and how proceeds are distributed among members. They also consider valuation and discount issues when LLC interests are gifted or passed at death. When designing coverage, producers must be clear about whether the LLC itself or individual members are the appropriate owners and beneficiaries. By understanding limited liability company basics and their planning applications, advisors can integrate life insurance smoothly into modern entity structures and support clients' asset protection and succession goals.