B. A few special uses of life insurance. Life insurance proceeds are a guaranteed, quick source of funds for the payment of post-death obligations. Despite maximal planning, substantial federal estate tax might be due. This can present a serious problem when the estate consists of non-liquid assets, like real estate. Family business owners often underestimate what their companies are worth for federal estate tax purposes.
Insurance can prevent a forced sale or liquidation of the business.
A family's biggest asset and primary source of income might be its share of a business owned by several un related partners. There are many variations on this theme, but funds must be available to honor the agreement. There are life insurance products specifically designed for this purpose. Survivorship life policies are relatively new, and there are many variations. They can be either term or whole life.