Business Insurance
Business Succession Planning
Key Person insurance is an important component of Business Estate Planning. Key Person insurance will provide a business with the capital needed to keep it afloat, in unfortunate event of the death, total and permanent disability or major medical trauma of a key person in the business. While this cover is typically taken out for the partners or directors of a business, it can also be taken out to cover important employees of a business. The policy would be owned by the business and the benefit is paid to the business in the event of a claim. The benefit payment will contribute to lost revenue and costs associated with the Key Person’s recovery time or the time and cost associated with finding a suitable replacement.
Buy/Sell Agreements are another important component of Business Estate Planning. A Buy/Sell Agreement involves the business owners entering into an agreement to cover their financial interests in their business, in the event that any of them die, become disabled, suffer a traumatic illness, resign or retire. Insurance cover can be established to pay a predetermined lump sum to cover many of these situations and to 'tie in' with your buy/sell agreement.
For example, Key Person insurance can also be used to insure a Key Persons ownership within a business. This agreement is usually supported with a partnership agreement, to ensure that the proceeds from the insurance benefit are passed to the Key Person’s family or beneficiaries in the event of death, serious disability or illness. Structuring one’s business affairs in this manner, will ensure that the surviving partners of a business, are not forced to find the capital to purchase the remaining shares in the business, from the departing partners family or beneficiaries.
Please enquire online or call us directly on (03) 9505 6301. We look forward to discussing any queries that you may have in relation to your Business Estate Planning.
