Sole Proprietor Life And Health Insurance

Definition of "Sole proprietor life and health insurance"

Lynn Leaders real estate agent

Written by

Lynn Leaderselite badge icon

HEARTLAND PROPERTIES

Coverage for the owner of a business. When a proprietor dies, debts of the business become the debts of the estate since in this circumstance the law recognizes business and personal assets as one. The executor is required to dispose of the business as quickly as possible. Life insurance can fund the disposition in several ways:

  1. If the business is transferred through a will, the life insurance's death benefit can be applied to the deceased proprietor's personal and business debts and estate taxes.
  2. If the executor conducts a forced sale or liquidation, a death benefit can be used to reduce or eliminate any debts. The death benefit can also be used as a source of working capital for interim financing to operate the business in the short run.
  3. If the business is to be transferred to a child or employee, the death benefit can provide funds to effect the transfer.
  4. If the business is to be sold to a key employee (s) through a buy-and-sell agreement, the key employee (s) usually has previously bought a life insurance policy on the sole proprietor and made all premium payments. The buy-and-sell agreement stipulates the formula to be used in valuing the business as well as other conditions of the sale. Upon the death of the proprietor and the sale of the business to the key employee (s), the proprietor's estate receives the cash amount according to the buy-and-sell agreement, and the key employee (s) receives the deceased proprietor's business.
 

Need help as a:

I'm interested to:

Buy
Sell
Rent

I work in:

Residential
Commercial
Rental
Reach out to the local professionals for help
 
I agree to receive FREE real estate advice.

Agents, get listed in your area. Sign up Now!

Here's what you'll get:

1. Full zipcodes coverage for the city of your choice for 3 months

2. The ability to reach a wider audience

3. No annual contract and no hidden fees

4. Live customer support/No robo calls

$75 - Any City - 3 Months Coverage
 
loader gif

Please wait ...

I agree to receive FREE real estate advice
I agree with Terms & Conditions and Section 5-5.9.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Insurance Terms

Health insurance coverage only for a specified catastrophic disease such as cancer. It is important to ascertain the waiting period required, maximum benefits and maximum length of time ...

Authorization to borrow from the U.S. Treasury by the issuance of notes to the Treasury. The Secretary of the Treasury must approve the notes and their interest rates. The PBGC must be self ...

Use of new rate structures by an insurance company without first obtaining approval of a State Insurance Department. ...

Policy under which the insurer will pay the actual cash value of the property at the time the property was damaged or destroyed provided the loss falls within the limitations of the policy. ...

One that provides group health or pension benefits for a multiemployer plan. To lower the cost, small firms band together to take advantage of the economies of large group underwriting. ...

Sum total of all assets owned by the decedent to include personal property, real property, and trust property. ...

Means of land title registration used in some states that in effect, provides a government sponsored form of title insurance. Under this system, a government official, such as county ...

In general, a civil wrong, other than breach of contract, for which a court will provide a remedy in the form of a suit for damages. Torts include negligent acts or omissions on the part of ...

Calculation of insurance premiums based on an age less than the current age of the insured. ...

Popular Insurance Questions