Buy-Sell Agreement Insurance uses life insurance, disability buy-out insurance, or a combination of both to help provide the funds needed to carry out the terms of a buy-sell agreement when a covered triggering event occurs.

The agreement establishes what should happen to an owner's business interest. The insurance helps provide the money to make it happen.

It depends on how the agreement is structured.

In a cross-purchase arrangement, the individual business owners generally own policies on one another.

In an entity-purchase or redemption arrangement, the business generally owns policies on the individual owners.

The appropriate structure can depend on the number of owners, ownership percentages, business structure, tax considerations, and terms of the agreement.

Not necessarily in the same way.

The number of policies and amount of coverage needed depends on the buy-sell structure, number of owners, ownership percentages, and value of the business.

With multiple owners, the insurance structure can become more complex, which is why the funding strategy should be coordinated with the actual buy-sell agreement.

The starting point is generally the current value of the business and each owner's respective ownership interest.

For example, if a business is valued at $2 million and has two equal 50% owners, each owner's interest may represent approximately $1 million of value.

The terms of the agreement and the overall financial circumstances of the business can also affect the appropriate amount of coverage.

That's exactly where many business owners need to start.

We offer access to a complimentary business valuation that can help establish an estimated current value of the business. That information can then become part of determining ownership values and potential buy-sell insurance needs.

Because businesses change.

Revenue, profitability, ownership percentages, business value, debt, and the circumstances of the individual owners may be very different from when the agreement and insurance were originally established.

A review can help determine whether the existing insurance funding still aligns with the agreement, current ownership, and today's business value.

Potentially.

An existing policy may be usable depending on its ownership, beneficiary designation, coverage amount, policy type, and the requirements of the buy-sell arrangement.

Before replacing or changing existing coverage, the current policy and buy-sell agreement should be reviewed together.

A significant health condition or previous decline doesn't necessarily mean the owner can't obtain coverage.

Our team works with hard-to-place life insurance and disability insurance cases, including significant health histories, previous declines or ratings, complex underwriting situations, and other circumstances that may require specialized carrier selection.

Different insurance carriers can evaluate the same medical history very differently. We can review each owner's circumstances and work with specialized underwriting resources to help identify carriers and coverage options appropriate for the case.

Yes. A buy-sell agreement can include provisions addressing a qualifying long-term or permanent disability.

Disability Buy-Out Insurance can provide funds to help purchase a disabled owner's business interest according to the terms of the agreement.

This is different from individual income protection, which is designed primarily to replace a portion of an individual's lost income.

Life insurance death benefits are generally received income-tax-free. However, tax treatment can depend on how the policy and buy-sell agreement are structured, including policy ownership and rules that may apply to employer-owned life insurance.

Because ownership and buy-sell structure can have important tax and legal implications, business owners should coordinate these decisions with their legal and tax advisors.

Potentially.

For larger insurance requirements, premium financing may be considered as a way to help fund larger life insurance premiums while preserving business or personal liquidity.

Premium financing involves interest costs, collateral requirements, policy-performance considerations, and additional risks, so it isn't appropriate for every business or situation.

No. There is no fee to work with us.

We are licensed independent insurance professionals and are compensated by the insurance carrier if coverage is purchased and placed.

You don't pay an additional fee for our insurance consultation, carrier comparison, underwriting coordination, or assistance with the insurance funding process.

There is also no obligation to purchase coverage simply to have us review your situation.

Absolutely — and we encourage it.

Buy-sell planning can involve legal, tax, valuation, insurance, and business considerations. We can work alongside your attorney, CPA, financial professional, and other members of your professional team to coordinate the insurance and funding side of the strategy.

Our goal isn't to replace the professionals you already trust. We bring specialized insurance knowledge, carrier access, and underwriting resources to the table so your team can work together toward the best possible outcome for you, your partners, and your business.

No. The legal buy-sell agreement itself should be prepared or reviewed by your attorney.

Our role is to handle and coordinate the insurance funding side of the strategy — including reviewing existing coverage, evaluating insurance needs, comparing carriers, coordinating underwriting, and working with your professional advisors.

If you already have an attorney, CPA, financial professional, or other advisor, we're happy to work directly with them throughout the process.

Not necessarily.

One carrier may be an excellent fit for one owner but not another because of age, health history, occupation, underwriting considerations, or coverage needs.

As an independent insurance resource, we can evaluate multiple insurance carriers and underwriting approaches for each owner rather than assuming every partner must use the same company.

A review should be considered whenever there is a significant change in the business or ownership, including changes in business value, ownership percentages, new or departing owners, substantial growth, new debt, or changes in the owners' circumstances.

Even without a major event, periodic reviews can help determine whether the agreement and insurance funding still reflect the business as it exists today.