Does your business need Buy/Sell Insurance? Buy/Sell Insurance and Agreements can protect the owners or shareholders should an owner is forced to exit due to illness, injury, death or some other reason. Each owner purchases a life insurance policy on the other shareholders or owners of the company. It’s a dome of protection for you and your business should it be raining drops of trouble.
Buy/Sell Insurance
One of the largest areas of negative exposure for many business partnerships is an underfunded buy/sell agreement. This video is a dramatization of a very common issue, especially with a business that has grown and prospered over the years.
Virtually all partnerships have Buy/Sell Insurance with an Agreement in their business documents. Whether an S-Corp, LLC, C-Corp, etc, there is built-in protection for the partners in the event of a partner’s death, disability, or retirement. Most Buy/Sell agreements are funded with life insurance.
This video perfectly highlights how an underfunded Buy/Sell agreement can cause serious issues for owners and partners who do not update their Buy/Sell agreements regularly.
Buy/Sell Insurance Rates
These are the types of issues that we try to bring out and offer solutions that will prevent the scenario that takes place in this well-done video.
Does Your Business Need Buy/Sell Insurance?
A well set-up Buy/Sell Agreement can:
- assure the remaining owners that the deceased’s share of the business will not pass on to someone unsuitable
- assure business continuity for customers, creditors and employees
- avoid assets being frozen due to legal issues created by the departing owner, their family, or estate.
- minimize risk should the departing owner’s spouse or family legally claiming business profits without working in the business
- avoid remaining owners needing to sell the business or borrow money to pay out the departing owner or their estate
Get Business Insurance
The US Small Business Administration says this on their website: “Business insurance protects you from the unexpected costs of running a business. Accidents, natural disasters, and lawsuits could run you out of business if you’re not protected by the right insurance.” See the full article here.
Need help? Get a free business counseling session from a trusted expert by contacting us. Neil has the expertise and knowledge to make the complex simple, and the process easy for you. Find out more about Neil Bauman.
Buy/Sell Insurance - Other Considerations
Your business requirements will be unique, and the arrangements can be complex. An important element is reaching consensus on how the business will be valued. There are different valuation methods, ways to share costs, and a number of other options. Expert advice is required.
Not everyone is ethical or experienced with insurance, as evident in the video. You don’t want surprises like that! Neil J. Bauman and Associates are proven, trusted and highly experienced professionals. And most importantly, We Always Do The Right Thing for you.
Make the First Move to Protect Your Business
We are happy to examine your existing insurances and see if we can lower your costs or increase your coverage if necessary.
Call us at (585) 978-9788 or contact us here.
