Buy-Sell agreement
A buy–sell agreement, also known as a buyout agreement, is a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies or is otherwise forced to leave the business, or chooses to leave the business.
It may be thought of as a sort of premarital agreement between business partners/shareholders or is sometimes called a "business will". An insured buy–sell agreement (triggered buyout is funded with life insurance on the participating owners' lives) is often recommended by business-succession specialists and financial planners to ensure that the buy–sell arrangement is well-funded and to guarantee that there will be money when the buy–sell event is triggered. How to set up different types of buy-sell agreements In an entity purchase buy-sell agreement, the business itself buys separate life insurance policies on the lives of each of the co-owners. The business usually pays the annual premiums and is the owner and beneficiary of the policies. In a cross purchase buy-sell agreement, each co-owner buys a life insurance policy on each of the other co-owners. Each co-owner usually pays the annual premiums on the policies they own and are the beneficiaries of the policies. If your company has a large number of co-owners, multiple policies must be purchased by each co-owner. A wait and see (or hybrid) buy-sell agreement allows you to combine features from both the entity purchase and cross purchase models. The business can buy policies on each co-owner, the individual co-owners can buy policies on each other, or a mixture of both methods can be used. Key Man Insurance
Key man insurance is the businesses contingency plan. The policy is in place to protect the business against the loss of income generated by key staff members. The business takes out a life insurance policy on one or more staff members who generate large profits for the company.
Why You Need Key Man Insurance Key man insurance provides emergency funding when the company needs it most. If your businesses income is generated by your staff this protection is vital. The lump sum provided should your key man become incapacitated can pay for any profit loss caused, any compensation which has to be paid out or funding to cover the replacement and training of staff. Contact us to more about our Business Insurance Plans . |
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Business Insurance Plans
It’s common sense to have full insurance coverage. And it’s good business sense to have a complete insurance business plan for your business!
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