Buy-Sell Insurance
Why use Buy-Sell Insurance?
In order to ensure a smooth transition and to protect the financial security of the business in the event of the death an owner of the business careful planning is crucial.
The most common source of funding for a buy-sell agreement is life or disability insurance. Typically, a separate policy is purchased for each business owner that will payout a sufficient amount in the case of an owners death or disability to purchase that partners portion of the business.
The insurance policy not only guarantees funding for the deceased partners family or beneficiary but also protects the business from additional hardship due to the costs associated with purchasing the deceased partners share of the business.
Care should be taken in order to ensure that the structure of the insurance matches the structure of the buy-sell agreement so that the correct policy owner and beneficiary are identified.