Business Owner with a Family and Net Worth of $5 Million

This is the story problem. Please look at the question at the very end of the story

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You have been recommended by an attorney to work with his clients to assist with their insurance needs for their business. The business, ABC Company, is owned equally by two partners, Jim, age 56 and Fred, age 42. The business is valued at $5 million and is organized as a Subchapter S Corporation. Each partner receives $1M annually in wages and Subchapter S dividends.

Each partner is contributing the maximum to the Company 401(k) plan annually. When you meet with them, you learn that they have no buy-sell agreement and no insurance. They tell you that they want to protect their families in the event of a death of a partner, and that they also want to be able to establish a retirement savings program for each of them individually outside of the Company 401(k) program. Each partner is married with children. They each have a net worth of $5 Million, including their ownership share of the Company.

They ask you to make recommendations to them to develop a plan of insurance for their personal and business needs. Please provide your recommendations, and make assumptions on which you will make your recommendation. You should discuss the types of insurance policies you would recommend and why you recommend them. Please keep your discussion to no more that 3 typewritten pages, double-spaced.

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In class we discussed Term Life Insurance, Variable Insurance, Universal Insurance, and Second-to-Die Insurance. Please help me narrow down this paper with any strategies that these gentleman can take.

Thank you