Partnership life insurance is crucial for business partners as it helps prevent financial strain and potential conflicts during a challenging time. Without this insurance, the surviving partners may struggle to afford the deceased partner's share, potentially forcing the sale of the business or causing disputes among partners. By having partnership life insurance in place, partners ensure a smoother transition, maintain business stability, and protect the interests of both the deceased partner's family and the surviving partners.

To determine the appropriate amount of coverage for partnership life insurance, business partners should assess the value of the business and each partner's ownership stake. This includes evaluating the business's assets, liabilities, and future earning potential. Partners can also consult financial advisors or insurance professionals to help establish a fair valuation. Additionally, it’s important to periodically review and adjust the coverage amount as the business grows or changes to ensure it remains adequate for a buyout in the event of a partner's death.

If a partner dies without partnership life insurance, the surviving partners may struggle to buy out the deceased partner's share, which could lead to financial strain. Conflicts may arise if the deceased partner’s family wants to retain ownership, creating legal and operational issues. Without insurance, the business's stability could be at risk, as the remaining partners may need to liquidate assets or seek external financing to cover the buyout, disrupting operations.