What are the Benefits of Funding a Buy-Sell Agreement with Life Insurance?
In business, the death of a company’s owner or one of its partners can be potentially devastating to the future of that organization. As such, many businesses will draft buy-sell agreements to protect against these types of situations. But, in some cases, the funds that are needed to put forth a buy-sell agreement may not be readily available, and this is where funding a buy-sell agreement with life insurance comes in.
The reason many business partners will turn to a life insurance policy to fund a buy-sell agreement is that life insurance is a more straightforward way of doing so, as not every business partner would have enough money to pay for a business, straight-up, when the partner passes away. When you own a life insurance policy, however, you can rest assured that if your business partner were to suddenly pass away, at any time, you will have the money you need to buy their portion of the business.
What’s most beneficial about using a life insurance policy to fund a buy-sell agreement is that there will be no delay in the business’ operations or other disruption that could have a potentially disastrous affect on the company overall. After the partner or sole owner passes away, the business can carry on as usual, with employees retaining their jobs and the company retaining its clients.
There are many who will gain when a buy-sell agreement is funded by a life insurance policy, including the business partners, employees and clients, as just mentioned. But, in addition, the heirs of the estate of the deceased will also benefit when a buy-sell agreement is funded by life insurance. Rather than having to wait for the business partner to pay for the deceased’s portion of the business, or to hire someone to sell the portion of the business, the heirs will receive the money they may need to subsist right away with the life insurance policy. The same type of benefits, namely the efficiency of payment, will be enjoyed by any and all business partners.
For more information on funding a buy-sell agreement with life insurance, contact a one of our licensed insurance agents at TermLife-Insurance.com. We can help with the purchase and structure of the policy in one easy phone call. We have in house specialists who do strictly Buy-Sell life insurance planning.
855 743 0199