Buy-sell Agreements

[squeed]

if you sell someone a buy-sell life policy, does that mean that if the owner of the business dies and you hold the buy-sell policy that you then own the business outright?

 

[Newby]

if you sell someone a buy-sell life policy, does that mean that if the owner of the business dies and you hold the buy-sell policy that you then own the business outright?

There are many variations but it is usually where a business partner or key employee has agreed to purchase the business from the spouse or estate for a predetermined price.

It keeps the surviving business partner from being partners with people he didn't plan to be partners with or a spouse losing their breadwinner and then haveing a business that they don't know how to run.

 

[SalemInsuranceGuy]

if you sell someone a buy-sell life policy, does that mean that if the owner of the business dies and you hold the buy-sell policy that you then own the business outright?

There really is no such thing as a buy-sell life policy. There is a buy-sell agreement and the life insurance policy is there to fund the agreement.

 

[moonlightandmargaritas]

if you sell someone a buy-sell life policy, does that mean that if the owner of the business dies and you hold the buy-sell policy that you then own the business outright?

You know, it seems from your questions like you are very diligent and eager to learn. That's a good way to be!

Unfortunately, you are not going to get an adequate (or even accurate) education on an internet forum.

Do yourself a favor - get a real insurance education. You'll spend a couple of bucks - but you'll get it back many, many times over...

The American College

 

[SalemInsuranceGuy]

You know, it seems from your questions like you are very diligent and eager to learn. That's a good way to be!

Unfortunately, you are not going to get an adequate (or even accurate) education on an internet forum.

Do yourself a favor - get a real insurance education. You'll spend a couple of bucks - but you'll get it back many, many times over...

The American College

Great advice. I'm actually enrolled myself and working towards my CLU. I'm just on my first class. I don't know why I never did this years ago, but better late than never right?

 

[Franz Kafka]

if you sell someone a buy-sell life policy, does that mean that if the owner of the business dies and you hold the buy-sell policy that you then own the business outright?

Salem is absolutely right. You need to team up with an attorney who will incorporate the agreement within corporate resolutions and with a CVA who will do the valuation according to the agreement. Many things need to be considered such as entity or cross-purchase, different cost basis for the shares, agreed upon method of valuation, any possible discount or premium for the shares purchased etc. There are attorneys who specialize in buy-sell planning exclusively. Find one and have him/her do all the explaining (our job is to fill out the app and pick up the check).

 

[Newby]

I agree also. I'm studying for my CLU'

I learned about Buy-Sells the old fashoned way though...I owned one and it was a very expensive lesson when I decided to leave the business.

 

[SportsNut]

There are attorneys who specialize in buy-sell planning exclusively. Find one and have him/her do all the explaining (our job is to fill out the app and pick up the check).

If you leave the details to an Atty, odds are someone else will be spending your commission check. Each one of the Attys has contacts, and when left to their own devices, 5 times out of 4 you are window shopping instead of participating.

I suggest that IF an agent is going to "play in this market", that they either KNOW the details on their own, or have an advanced sales staff from a quality company who will do the detail work... therein protecting the agent. Nothing wrong with employing specialists, just make sure that they have your back... versus ahold of the knife that is protruding from your back.

 

[padthaiforlunch]

if you sell someone a buy-sell life policy, does that mean that if the owner of the business dies and you hold the buy-sell policy that you then own the business outright?

You know, it seems from your questions like you are very diligent and eager to learn. That's a good way to be!

Unfortunately, you are not going to get an adequate (or even accurate) education on an internet forum.

Do yourself a favor - get a real insurance education. You'll spend a couple of bucks - but you'll get it back many, many times over...

The American College

In the meantime, go to topgunproducer.com for free and get some answers.