Partnership Insurance

What Does Partnership Insurance Mean?

Partnership insurance is a type of insurance typically bought by business partners. It often involves partners purchasing life insurance policies on each other and designating themselves as beneficiaries. In the event of one partner’s death, the surviving partner can use the life insurance payout to buy the deceased partner’s share of the business. Most partners use term life insurance for this purpose because the coverage only needs to last as long as the partnership does, which keeps premiums lower than whole life policies.

Insuranceopedia Explains Partnership Insurance

Partnership insurance protects businesses by preventing a third party from purchasing a deceased partner’s share. With this type of insurance, the surviving partner typically gains control of the business, ensuring that the ownership remains within the existing partnership. Partnership insurance is usually paired with other business coverage, such as LLC business insurance, since the same owners who fund a buy-sell arrangement also need liability and property protection for the company itself.