I recently conducted a meeting with two business partners who wanted to know more about how life insurance could be used to protect themselves and their business.  They also wanted to know what kind of life insurance would be best for their current and future needs. 
 
I explained that they should consider two kinds of life insurance.  I recommended a life policy for each of the partners to fund their buy-sell agreement.  The amount of insurance was based on the value of their company shares.  This is referred to as buy-sell insurance. 
 
I also suggested that they purchase some additional life insurance for any key people they identified as being essential to the ongoing operation and success of their business.  This is referred to as key-person insurance.  The proceeds from this insurance can be used to inject cash into the business while the surviving management team looks for a suitable replacement for the key person.