Buy / Sell business arrangements are used by business owners who want to ensure that, if they depart from the business by an involuntary event such as death, disability or serious illness, the succession of the business has been considered.
To determine the level of cover that you and your business partner/s may need, consider the value of each owner’s share of the business. This value amount should generally reflect the sum insured on the buy and sell life insurance agreement. It is important that the business owners review this amount on an annual basis to ensure adequate cover is in place.
For example, if the business has two owners and each has an equal share of a business with a value of $2 million, the amount insured on the life of each partner should be $1 million on a buy/sell life insurance agreement that will provide cover for death, TPD and possibly trauma.
Requirements
of the buy/sell agreement (Eg, type of cover, amount of cover
Who
owns the insurance policy
Income tax including ability to deduct premiums and accessibility of the proceeds
CGT (capital gains tax) on the proceeds
When deciding which investments are right for you, it is important to understand the trade-off between risk and return and how to manage investment risk.
By setting goals, planning ahead and being smart with your savings and debt strategies – you can actively grow your wealth even from a
modest start.