We don’t like to think about it, those ‘what if’ scenarios that could put a really unexpected spanner in the works. Those not-so-nice things are unfortunately things we have to consider when we look at entering a professional partnership or starting a business with someone else.
The chaotic journey of life comes with its obstacles. It is hard to predict how the future will eventuate, this is exactly why buy-sell insurance is a must. It helps individuals retain control, no matter what happens in the future.
It is very important to have a continuous flow of your business and its operations regardless of what unfolds. Your business can’t afford to stand-still because things are in a disarray. We have to maintain stability, even through life’s speed bumps.
What is buy-sell insurance?
In simple terms, try and think of buy-sell insurance as a mechanism to allow the documented agreement between business partners to be executed. As there are many things that can go wrong, it’s incredibly important to have a solicitor draft an agreement clearly how things will unfold for you and the business as a whole if something unexpected does in fact eventuate.
Make sure you consider a large range of possibilities:
It’s a good idea to cover as many events as possible in your agreement. Speak to your solicitor to list about what sort of events should be including, death, total permanent disability, critical or long-term illness, retirement, divorce or even a major disagreement between the owners that can potentially impact your business and each owner’s decisions. Another important but often overlooked situation is bankruptcy. Thinking of a broad range of scenarios is important and needs to be hashed out from the start. There is no time like the present.
Maintaining a fair value price for shares:
If a business partner wants to remain in the business after another partner’s unexpected exit, this will help avoid disagreements that might arise as a result. Regularly reviewed and updated buy-sell insurance facilitates payment of agreed market value of the individual’s share in the business – so you can breathe easy during this transition with the knowledge that the cover remains appropriate for changing valuations.
It is totally understandable that you don’t want to think about these things, no one does. That is why it is best to leave this to the professionals. The grim side of life is unfortunately always a possibility and it helps to have an adviser ease this for you.
We here at Visia Financial Services will walk you through the world of buy-sell insurance in a painless way that secures your footing in this very unpredictable world of business.
Book A Consultation
Book your complimentary discovery call with Kora Drage today.