Let’s skip the usual insurance lecture.
You didn’t build your business to spend afternoons reading about policy structures. But here’s the uncomfortable truth: there’s a good chance something changed in the last 18 months that directly affects your coverage — and nobody called to tell you.
A Supreme Court ruling. A new federal law. A gap in coverage that most businesses have and nobody talks about.
Any one of these could cost your family and your employees everything if something happened to you tomorrow.
Five minutes. That’s all this takes. Let’s go.
Problem 1: The Supreme Court Just Broke Thousands of Buy-Sell Agreements
If you have a business partner, you probably have a buy-sell agreement. It says: if one of us dies, the other buys out their share. Life insurance funds the buyout. Clean and simple.
Except the Supreme Court just made it a lot less simple.
In a 2024 case called Connelly v. United States, the Court ruled that life insurance proceeds paid to a company count as a company asset. That inflates what the business is worth on paper. A more valuable business means a bigger estate. A bigger estate can mean a much larger tax bill — owed by the family of the person who just died.
Here’s the brutal version: your partner dies, the company collects $3 million in life insurance, and now your partner’s family owes taxes on that $3 million they never actually received.
The IRS already won this argument in the Supreme Court. It’s not a gray area anymore.
The catch: this only hits “entity-redemption” agreements, where the company buys back the shares. If your agreement is structured that way — and roughly half of all small business buy-sell agreements are — it needs a legal review. Now.
The fix exists. It’s called a cross-purchase agreement. Your attorney can restructure it. But you have to know you need to.
If you have a business partner and you haven’t reviewed your buy-sell agreement since 2024, this is the single most urgent thing on your plate.
→ Not sure which type of agreement you have? Book a 20-minute call and we’ll tell you exactly where you stand.
Problem 2: A New Law Changed Your Estate Math — and Your Coverage Might Be Wrong Now
In July 2025, a federal law permanently raised the estate tax exemption to $15 million per person.
What that means in plain English: if your total estate — house, savings, business value, everything — stays under $15 million, your heirs owe zero federal estate tax when you die.
For most small business owners, that’s a huge relief.
But here’s the problem: a lot of business life insurance policies were sized specifically to cover an expected estate tax bill. If that bill just disappeared, those policies are solving a problem you no longer have — while a different problem goes uninsured.
Are you in Oregon, Massachusetts, Washington, or one of 10 other states? Those states still have their own estate taxes, with much lower exemptions. Oregon’s kicks in at $1 million. Massachusetts at $2 million. If your business is worth more than that, you’re still very much exposed — just at the state level.
The point isn’t panic. The point is: the math changed. Your coverage should match the new math.
Most business owners haven’t updated their policies to reflect this. That means some are overpaying for coverage they don’t need. Others stripped down coverage thinking they were fine and left gaps they didn’t mean to leave.
→ A 30-minute policy review can show you exactly which scenario you’re in. Start here.
Problem 3: The Person Your Business Can’t Survive Losing — Probably Isn’t Insured
This is the one that actually keeps owners up at night once they hear it.
Most business owners have some life insurance on themselves. What almost nobody has: coverage on the key employee who isn’t an owner.
Think about your business for a second. Is there someone — a top salesperson, a project manager, a lead technician, a CFO — who, if they walked out tomorrow, would genuinely hurt? Not inconvenience you. Hurt you. Clients who are loyal to them personally. Revenue that flows through them. Systems only they know.
That’s a key person. And somewhere between 60 and 70% of businesses that have this kind of concentration risk carry zero insurance to cover it.
Here’s what it actually costs when a key person leaves or dies:
- Executive search: $30,000–$100,000
- Onboarding and training their replacement: 6–12 months
- Lost clients who followed them out the door: unpredictable
- Revenue gap before the replacement hits full productivity: often 18 months
For a salesperson generating $800,000 a year, the real replacement cost can easily clear $2 million. A term policy covering that? A few thousand dollars a year.
You’re spending more than that on software subscriptions.
One important note: the employee has to know about the policy and sign off on it. You can’t secretly insure someone. But that conversation — “you’re important enough to this company that we’re protecting against losing you” — is one of the best retention conversations you’ll ever have.
→ Want to know how much a key person policy would actually cost for your situation? Get a fast quote here — no commitment, no sales call unless you want one.
The Quick Test: Does Your Coverage Actually Hold Up?
Take 90 seconds. Answer these honestly.
On your buy-sell agreement:
- Do you have one?
- Is it entity-redemption style (the company buys back shares) or cross-purchase (co-owners buy from each other)?
- Has it been reviewed since June 2024?
- Does the life insurance funding it match what your business is actually worth today — not what it was worth when you signed the agreement?
On key person coverage:
- Who in your company, besides you, would genuinely hurt the business if they were gone?
- Are any of them covered?
On your debt:
- Does your business have SBA loans or lines of credit with personal guarantees?
- If you died this week, could the business make those payments?
On your state:
- Do you live in one of the 12 states with its own estate tax?
- If yes, has your coverage been sized around the state threshold, not just the federal one?
If you hit even one “I don’t know” in that list, you have a gap worth finding before it finds you.
What a Good Agent Actually Does (And What’s a Red Flag)
A good business life insurance conversation starts with your situation, not a product pitch.
The right questions: How many owners? What’s your buy-sell say? Who can’t you afford to lose? What debt does the company carry? What state are you in?
If someone skips those questions and jumps straight to “here’s what I recommend” — slow down. You’re being sold to, not advised.
Also worth knowing: the Connelly fix, the estate tax adjustment, the key-person gap — these are problems that touch legal, tax, and insurance all at once. A good agent works alongside your CPA and attorney. Anyone who claims they can handle all of it themselves either doesn’t know what they don’t know, or does know and doesn’t care.
The Bottom Line
Business life insurance isn’t about being morbid. It’s about not letting something predictable destroy something you spent years building.
Three things changed recently that probably affect your coverage. Most businesses haven’t caught up. The ones that do this year are going to be in a completely different position than the ones that don’t.
The review takes a few hours. Most of it can happen in a single call.
You’ve put too much into this business to leave the protection part on autopilot.
Find Out Exactly Where You Stand — Free, No Pressure
At Fish Creek Life, we work with small and mid-sized business owners to find the gaps, fix the structure, and make sure the coverage matches what the business is actually worth today.
We’ll review your buy-sell agreement structure (yes, including Connelly exposure), identify uninsured key-person risk, check your debt coverage, and flag any state estate tax issues — all in one conversation.
No obligation. No hard sell. Just a clear picture of where you are.
Schedule your free business insurance review at fishcreeklife.com →
This article is for educational purposes only and does not constitute legal, tax, or financial advice. Please consult qualified legal, tax, and financial professionals about your specific situation.
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