Life insurance is a great product for many reasons, it provides a financial safety net in the case of loss to a loved one, but it also offers financial compensation to someone like a business partner in the event of your death. What does that mean exactly? Does that mean a business partner can purchase a life insurance policy on you without your knowledge?
Insurable interest, as defined by Wikipedia, “an interest based upon a reasonable expectation of monetary advantage through the continued life, health and bodily safety of another person,” an illustration of this would be business partners. In the event that one business partner should pass away, the other would need enough funds from the “insurable interest” policy to buy out the business partner’s shares from the family.
In many cases, a deceased business partner’s shares is a part of his or her estate, unless the business partners have a buy/sell agreement. This is where obtaining a life insurance quote for each business partner is a necessity, and buying that life insurance policy is a top priority. Any buy-sell agreement that is insured activates buyout of the other owner’s share by the life insurance funds.
Business partners are not the only ones who have insurable interest, other examples, would be a spouse or immediate blood relative. Secretly purchasing life insurance policies on a spouse is not allowed; the person the insurance is on must give consent to the purchase of the life insurance policy. Family members like parents/children, husband/wife, even brother/sisters (each jurisdiction has its own definition of family relationships and the insurable interest), if they would suffer financially due to the death of a person, they are able to purchase a life insurance policy with the consent of that person.
Overall, buying life insurance on yourself is important, especially if there are dependents, mortgage, and/or a business involved. Consider this, if you are involved with a business partner, and that partner were to die unexpectedly, would there be enough funds to buyout the shares? Would there be enough funds to keep the business financially stable without an insurable interest life insurance policy? If the answer is no, then consider buying life insurance on one another simultaneously, click to visit website, and learn more about life insurance products.