In the event of death, the insurance company pays the surviving shareholder, who can then purchase the remaining stock from the deceased's estate. With a stock redemption plan, shareholders enter an agreement with the corporation. If a shareholder dies, the insurance company pays the policy proceeds to the corporation, which then purchases the shares from the estate of the deceased shareholder. The sale would follow a pre-determined formula agreed upon when all the shareholders were alive and well. If you or one of your partners are planning to retire10 or more years from now, it is not too late to start thinking about an exit strategy.
Many small businesses wither under new management, simply because there has been no planning.
The goal is not just to get out of the business, but to get out of the business more than what you put into it. A Registered Investment Advisor.