When an owner of a business dies, or becomes disabled, injured or ill, or chooses to leave the business, the surviving business partner/s will often desire ownership and control of the business, and the Estate will want funds to maintain their lifestyle. Buy/sell insurance arrangements can provide the money to fund some of these needs. It allows the surviving business partner/s of a business to buy out the deceased or disabled owner’s interest in the business.
Most business owners don’t leave their tangible assets (buildings, plant, equipment and stock) uninsured for a single day. Yet it is not their tangible assets, but themselves, their business partners and their key people, who make the business successful.
This is an area of particular expertise for Futura Financial Group with past experience ranging from simple two person partnerships through to 14 company franchise arrangements.
Business key person protection
Key person insurance will protect your business from the loss of individuals whose capital, knowledge, client base or experience are vital to the company’s success. This can include a director or specialised employee. An example could be a sales director with valuable contacts which, together with the business they provide, could be lost if he or she died. The loss of a key person can affect the business in two main ways.
Key person insurance is effectively life insurance taken out by the corporate entity. The insurance can and should cover the health and life of the employee deemed critical to the value and success of the business. The key person may be a director, key shareholder, senior employee, manager or simply an effective salesperson.
Key person insurance is often implemented along with buy / sell agreements which clearly articulate the plans of key owners (business stakeholders) in the event of unexpected death or major injury.
Without adequate buy / sell agreement and key person insurance your business is at risk of:
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530 Little Collins Street
Melbourne VIC 3000