Whether you’re a commercial real estate broker, landlord rep, corporate real estate rep, or work in any other CRE role, life insurance for commercial real estate professionals can play a meaningful part in your long‑term financial strategy. Your needs will evolve over time, and the types of life insurance available to you may change depending on your employment structure, family situation, and financial goals.
Life insurance isn’t for you, it’s for the people who survive you. After you pass on, they may need money for two reasons:
- To replace the income you provided, so they can maintain their lifestyle
- To secure or preserve the assets you leave behind, without being forced to sell them
Let’s look at each of these more closely. Burt first, here’s an overview of what this article covers.
What This Article Covers
- Why life insurance matters for commercial real estate professionals
- How life insurance protects illiquid CRE assets and potential estate taxes
- When non‑working spouses and families may need additional coverage
- Using life insurance for buy‑sell agreements and estate planning (including ILITs)
- How a fiduciary advisor evaluates life insurance needs without commissions
Life Insurance for Income Replacement
If anyone relies on your income—your spouse, children, dependent parents, or anyone else—there’s a strong chance you need life insurance. Unless you leave behind assets that can reliably generate income, life insurance provides the financial support your loved ones need to maintain stability without drastic lifestyle changes.
It’s a common misconception that only income‑earning spouses need life insurance. In reality, a non‑working spouse who provides essential household services may also need coverage. If that spouse passes away, the family will still need childcare, transportation, meal preparation, and other support—services that carry real economic value. Life insurance can help cover those costs.
Most people need life insurance for income replacement or to offset increased expenses after a loss. Once you reach a point where no one depends on your income, your need for life insurance may diminish.
Life Insurance to Secure Assets
For people who have built significant levels of assets and net worth, life insurance can also help protect those assets for the next generation. Two common scenarios include:
1. Covering Estate Taxes
If the value of your estate exceeds estate tax exemptions, life insurance proceeds can be used to pay tax bill. For example, if you own a shopping center and pass it to your heirs, they may inherit this illiquid asset. When the estate tax bill comes due, rather than having to sell the shopping center to pay the tax, the insurance proceeds can be used for this. Life insurance use for this purpose is often purchased using an irrevocable life insurance trust (ILIT).
2. Funding Buy-Sell Agreements
Life insurance can be used to facilitate the sale of your business ownership interest after you die. Real estate partnerships—and other business partnerships—often implement buy-sell agreements that come into play when one of the owners passes away. These agreements provide for either the other owners or the business itself to buy the deceased partner’s share. Again, life insurance proceeds can provide the liquidity to facilitate this. You can read more about these arrangements in our posts about cross-purchase plans and entity-purchase plans.
More To Know
Once you understand why you might need life insurance, two questions immediately come to mind:
Those are the topics of our next two posts.
At Dominion Financial Advisors, we do not sell life insurance. As part of our comprehensive financial planning process, we perform a life insurance needs analysis to determine which types of insurance are suited to your situation. As fiduciary financial advisors, we don’t receive any commissions, referral fees, or kickbacks for life insurance. As your advisor, our only goal is to provide best advice we can offer.