Business Life Insurance

Life insurance financially protects a business from adverse impact if an owner or key employee suddenly dies. The policy provides funds to repay debt or continue operations, as well as find, recruit, and train a replacement. This helps replace any lost profits, strengthening the balance sheet to assure suppliers, creditors, customers, and investors that the business will continue. There are guidelines:

  • Key person: Maximum 5 - 10 times compensation.
  • Buy-Sell / Business Continuation: Limited to market value of insured's portion as detailed in buy-sell agreement or 3rd party financials.
  • Business loan coverage: Minimum of 5 years remain on loan, limited to 75% of loan, prorated per each owner's share of business. Business will be owner and beneficiary with collateral assignment to lender.
  • WHEN IN DOUBT, direct client to seek professional counsel from an accountant or lawyer.


Income Replacement Factors
20 - 40
41 - 50
51 - 55
56 - 65
66 - 70
Consider Individually

If applicant has existing life insurance, reduce the maximum by that amount.

For a non-employed spouse, if household income is:

  • <$25,000, up to 10 x income of employed spouse.
  • $25,000-$99,999, up to $250,000.
  • $100,000+, up to $500,000.
  • When employed spouse's coverage is known, can match that amount up to $1,000,000.

For Estate Conservation, need is based on taxable value of the estate. Estate conservation analysis must be included with application. Maximum allowable growth rate is 6% up to a maximum limit of double the current gross estate.

Your client wants to buy a very large policy, or already has a considerable amount of life insurance and wants to buy more. Each company has underwriting limits, but there are some general guidelines. By being aware of them, you can avoid having to explain why the company didn't approve the amount applied for. If you can financially justify with acceptable documentation, almost any amount can be considered. These are common financial situations:

How Much is Too Much?

The easiest way to sell life insurance!

This website is for licensed insurance agents and their support staff - Not for dissemination to the public.