Buy-sell agreement: the owners agree in advance that when one dies, the heirs must sell, and the surviving owners (or the business) must buy, the deceased owner's share at a set price or formula. Life insurance funds the purchase. Cross-purchase: each owner insures the others. Entity purchase (stock redemption in a corporation): the business owns the policies and buys back the share.

Key person: the business owns a policy on an employee whose death would hurt profits, pays the premium and is the beneficiary. The money helps cover lost revenue and the cost of finding a replacement. Premiums are not tax-deductible when the business is a beneficiary (IRC §264(a)(1)). The death benefit is generally income-tax-free, but for employer-owned policies the federal notice-and-consent rules of IRC §101(j) must be met. California also requires the employer to get the insured's written consent (Ins. Code §10110.1(c)).

Executive bonus: the employer pays the premium, as a bonus, on a policy owned by the executive. The bonus is taxable income to the executive.

Business continuation: keeps a sole proprietorship, partnership or corporation going after an owner dies, usually through the buy-sell structures above.