Can we keep the policy in force?
Let’s suppose two business partners put together a buy-sell agreement (good move! Now they have a plan for business succession in case one of them tragically dies; gets too hurt or sick to continue working; or decides to retire ahead of schedule.)
Now let’s suppose they fund it with life insurance (another good move! That’s probably the most economical way to do it.)
Now let’s say that one of the partners decides to retire early. Can the other partner still keep the life insurance in force on his life?
It’s a good question. We know that the owner controls the policy. If the active partner was the owner (and he should be,) then he can keep that coverage in force even though his partner is no longer with the business. He just has to keep paying the premium.
This took place with a client a few years back. A partner retired. The firm kept the policy in force that had been used to fund their buy-sell agreement. Unfortunately, the retired partner died soon after he left the firm. They collected a bundle.