What Happens to Key Person Insurance When Your Business is Sold or Closed?

When small business owners prepare to sell or liquidate their companies, their transaction checklists are dominated by major operational priorities. Founders focus on negotiating purchase price multiples, clearing commercial real estate leases, auditing accounts receivable, and transitioning client contracts. Corporate life insurance policies maintained by the company are routinely forgotten until the final days of legal due diligence. Neglecting your corporate life insurance portfolio during a business exit can cause unexpected tax liabilities, lost cash assets, or broken closing agreements.