Life insurance can be a very important tool for protecting your business. You can protect the business against taxes, but you can also use life insurance to reduce the impact of losing a key part of the workforce as well. Your business is an important legacy to leave behind, and it should be protected against your death for the sake of those you leave behind.
Typically, a lot of the resources of the company are wrapped in the company, leaving only a margin of operational funds. Simply put, the liquid assets of your company may not be sufficient to pay the estate taxes on the business if you die. But a life insurance policy could name the company as a beneficiary, with the proceeds being used to pay the taxes owed.
If you have a key employee, or are one yourself, then you can be insured by the company. A key employee can be described as someone who holds vital knowledge about the company or its procedures, putting the company at a major disadvantage if that person dies or becomes terminally ill. The idea of key employee insurance is to mitigate the losses if such a person is longer able to provide their services to the company.
For some purposes, a whole life insurance policy is the best solution, but for others, a term life policy works just as well. For example, you know that a key employee is going to retire in 10 years, so the policy only has to remain effective during that period, after which you have to make other arrangements regardless of that person's health. But you, as a controlling interest, are the key to the perceived success of the company, and will presumably remain in that position until you die or decide to retire.