Protect Your Business and Your Family Against the Loss of an Owner
Planning for the loss of a business owner or partner is crucial to ensuring the continuity of your business and protecting the financial security of your family and the families of each partner or co-owner.
To protect your business, your loved ones and your co-owners or partners, you can implement what is known as a buy sell agreement, which specifies what will happen to the interests of a deceased owner, partner or shareholder. If your company's buy sell agreement requires the surviving owners or partners to purchase the deceased's interests, you can use life insurance—rather than personal funds or business assets—to fund the buy sell agreement.
For many business owners, the simplest option is to purchase a life insurance policy on the life of each co-owner or partner. In this way, funds will be available to complete a buy-out and provide the families of each partner or co-owner a secure source of funds for the value of their interest. Alternatively, the business could acquire insurance on the life of each co-owner or partner and use the insurance proceeds to purchase or redeem the deceased's interest in the business. The structure of the buyout and insurance funding should be tailored to the objectives of the business owners.
Protect the Continuity of Your Business Against the Loss of a Key Employee or Owner
Key Person Insurance
Does your business include someone whose contribution is vital to your business? If yes, then key person life insurance should be a critical component of your business continuity and succession plan— especially if you're a small business owner.
If an insured key employee were to die, key person life insurance would provide a tax-free cash payment that your business could use as working capital and to help manage issues related to the person's death, including:
· Recruiting, hiring and training your employee's replacement.
· Can be both time- consuming and expensive
· Paying off debt and dealing with creditors that wish to expedite loan repayment
· Alleviating potential lenders' concerns about your company's financial health
· Reassuring customers, employees or investors that the business will continue operating
What's more, if you or your family rely on your business as a primary source of income, key person life insurance can help ensure that the business will continue to provide a secure financial future.
For more information or to request a personalized quote call 416.219.0222 or email: email@example.com