As the owner of a business, there are a variety of reasons that relate to the decision to obtain buy-sell life insurance. The coverage is not the same as a basic insurance policy that is designed for your family; instead, it focuses on the needs of business owners and their partners in case a death occurs.
Transfer of Ownership
A buy-sell life insurance agreement is a plan of action in the event that one partner dies after starting a business. It determines the percentage and distribution of company assets after that death so that there is an appropriate transfer of ownership based on the preferences of the individual and any partners that are involved in the development and growth of the company.
It ensures that ownership is transferred to the selected individual or individuals based on pre-determined agreements.
Limitations During a Lifetime
Even though the obvious reason for the plan is related to the eventual death or even the accidental death of a partner in a company, the policy can also provide benefits during the lifetime by setting specific restrictions and limitations on the distribution of stock in the company.
Since the business owners can have a large number of stocks in the company, the limitations ensure that owners do not sell large amounts of stock at the same time and that any individuals who inherit the company stocks will follow the same limitations. It protects the assets of the company, even while you are alive.
Business owners have a variety of tools to ensure that problems associated with the company are limited. A buy-sell agreement is one method of ensuring that assets are properly distributed and maintained, even if one partner passes away. Contact us to speak to an agent to learn more about protecting your company.