Buy/Sell Insurance
What is Buy/Sell Insurance?
If you have one or more business partners, you need a Buy/Sell Agreement in place. This is a contract that documents what will happen if an owner leaves the business due to an injury, disablement, death or other reasons.
However, an agreement alone is not enough as you will need funds to ‘buy-out’ the departing owner or their estate. Therefore, an insurance cover coupled with this agreement can ensure that the remaining owners can compensate the departing owner for their share and continue operating without placing the business at risk.
Other considerations
There are several options when it comes to policy ownership which could be self, through cross-ownership, trust or business. The structure chosen will depend on your situation and will have different tax implications. The process would also typically involve a business valuation by an accountant and decisions around funding of insurance premiums.
It is also important to ensure that your level of insurance cover keeps pace with changes in the business value so a review from time to time is crucial.
Other Insurance Covers
TPD Insurance
Trauma Insurance
Income Protection
