Termco
Termco
  |   Contact Us
INSTANT QUOTE
LIFE INSURANCE
NEWSLETTER
CUSTOMER SERVICE
AGENTS RESOURCES
AGENTS OPPORTUNITIES
 
 
Business Insurance: Key Person Insurance and Buy-Sell Agreements
 
Key Person Insurance
It’s a common practice for companies to insure their property and inventory, but many businesses fail to insure their most valuable asset: key employees. The loss of a key employee can substantially effect the financial health of an organization.

A key person is anyone in the organization whose death or disability would:
  
Result in the disruption of normal business operations.
Result in lost customers or profits.
Result in the loss of a specialized skill.
Result in the company’s inability to secure financing.
Trigger a financial obligation to be met by the
company such as a stock redemption or debt repayment.
 
A key person insurance policy will insure the organization against the loss of important human assets. This policy will cover the death or disability of a key employee. The employer pays the policy premium and is the beneficiary of the policy. If a key person dies or is disabled, the company receives the policy benefits tax-free.
 
Examples of key persons:
Business owners

Key executives

Programmers and Developers

Attorneys

Creative Talent

Scientists

Entertainers

Professional Athletes
 
Obtaining key person coverage is a simple process similar to applying for individual life or disability coverage. The process involves an application and medical exam. The entire process usually takes 4 to 6 weeks to complete. To receive an immediate quote on key person life coverage, click here.

Buy-Sell Agreements
Almost any owner of a closely-held business will benefit from a funded buy-sell agreement. The business is usually the source of the owner's income and is most often the largest asset in a business owner's estate. Death or disability of a business owner or partner can leave the business partners and their families in a precarious position.

All types of business entities; sole proprietorships, partnerships, LLC's and corporations need the solutions buy-sell agreements provide. Each type of entity has unique problems which arise from the death or disability of an owner. A buy-sell agreement can be tailored to provide a solution for each.

 
A carefully developed buy-sell agreement will:
Create a market for a shareholders stock when it is needed at the owner's death, disability or retirement.
Establish the purchase price for the deceased, disabled or retired owner's interest.
Restrict the transfer of stock or interest in the business to other owners or family members.
Provides liquidity for the payment of estate taxes or other costs.
 
Several methods are available to fund a buy-sell agreement:
Use funds from current or future working capital
Borrow funds from a third party
Initiate a sinking fund
Life and disability insurance funding
   
Life and disability insurance offer the most cost effective solution to funding a buy-sell agreement. Cash is immediately available to the entity or surviving owners to purchase the deceased or disabled owner's interest. This will provide the former owner's family with income or funds to pay estate settlement costs and taxes. In addition, insurance proceeds are typically income-tax

free.Insurance proceeds can satisfy the obligation to purchase as outlined in the buy-sell agreement without placing a financial strain on the buyer. A wide choice of products including term, whole life, universal life and survivorship insurance allow for flexibility in design and cost.

Obtaining buy-sell insurance is a simple process similar to applying for individual life or disability coverage. The process involves an application and medical exam. The entire process usually takes 4 to 6 weeks to complete. To receive an immediate quote click here.

 
 
 
 
 
 
Termco.com

1333 N Northlake Way, Suite G, Seattle,
WA 98103

Email: info@termco.com
Phone: 1-800-588-1251
 
Home | Instant Quote | Life Insurance | Newsletter | Customer Service | Agent Resources | Agent Opportunities | Contact Us
Add Url | Privacy Policy | Legal Notice | Resources | Site Map