Buy & Sell
What Is Buy and Sell insurance ?
A buy-and-sell insurance policy is a type of life insurance policy that is designed to help business owners protect their interests in the event of death or disability. Under a buy-and-sell agreement, each business owner takes out a life insurance policy on the lives of the other owners. In the event of the death or disability of an owner, the proceeds from the life insurance policy are used to buy out the deceased or disabled owner's interest in the business. This ensures that the business can continue to operate without interruption and that the surviving owners are not left with a financial burden.
Buy-and-sell insurance policies can be a valuable tool for business owners who want to protect their interests and ensure the continued success of their business. If you are a business owner, you should consider talking to one of our financial advisors about whether or not a buy-and-sell insurance policy is right for you
Benefits of having a buy-and-sell insurance policy
- Provides financial security for the surviving business owners in the event of the death or disability of a co-owner.
- Helps to ensure the continued operation of the business.
- Can help to prevent disputes among the surviving business owners.
- Can provide tax benefits.
How a buy-and-sell insurance policy might work
- Two business partners, John and Mary, each take out a R1 million life insurance policy on the other's life.
- The policy is paid for by monthly premiums that are deducted from John and Mary's salaries.
- In the event of John's death, the proceeds from his life insurance policy (R1 million) are used by Mary to buy out John’s interest in the business.
- Mary now owns 100% of the business and can continue to operate it without interruption.
