Forums: Discussions for entrepreneurs and small business.

as a way to attract investors I have been looking into the idea of purchasing term insurance for the amount that an investor invests. I ran into an entrepreneur a few years ago who was using this strategy very effectively but lost contact with him.  None of the insurance companies I spoke to had any objections, they simply did not know how they would structure this.

I understand that some large investors require insurance on particular types of investments.

How would I structure this?

It is fairly common for companies (especially start ups) to carry life insurance on the key people in the organization (called Key Man insurance).

In a typical structure the company is the beneficiary so that in event of the death of a key person, the company would have the funds to (a) buy out investors, (b) find a suitable replacement (c) exist until another suitable solution was found.

From my experience, the presence of insurance would (in and of itself) not be an enticement or lure for investors.

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That`s great information.  I believe He called it performance insurance.  The business owner promised to perform and in the event he didn`t the insurance would kick in.  Any insight in this?  Thank you for your response.