Make sure your loved ones` financial future is protected by life and disability insurance. A buy-sell agreement can also be called a cross-purchase agreement. If your business`s sales contract requires other owners or partners to acquire the interest of a deceased or disabled owner, life or disability insurance can be used to finance your sales contract. The advantages of a buy-sell life insurance policy are: the contract can prevent owners from selling their shares to outside investors without the consent of other owners. Similar protection may be granted in the event of a partner`s death.  If a permanent disability is also a triggering event, it could also be funded by insurance (disability). Consider the value of each owner`s involvement to determine how much coverage you and your partners need. This amount of value should reflect the amount insured in the buy-sell life insurance policy. And entrepreneurs should review this amount each year to ensure adequate coverage is maintained. I wanted to express my sincere gratitude for the way you and your team handled my wife`s death on your insurance policy. I think the measure of an insurance broker is its responsiveness in need. If many business owners wish to enjoy the benefits of a cross-purchase contract while avoiding the risks associated with a cross-purchase, the creation of a limited liability company managed by managers (“Insurance LLC”) should be considered in order to maintain and manage the insurance policies that ensure the lives of entrepreneurs.
Existing policies owned by the owners can be transferred to Insurance LLC or new policies can be purchased by Insurance LLC. Each member of Insurance LLC is designated as the economic beneficiary of life insurance policies that insure other members whose interests in that member`s operating entity are required to purchase to death under the operator`s sales contract. Life insurance must also designate Insurance LLC as a beneficiary. Insurance LLC is owned by all policies that provide centralized management and creditor protection for policies it has taken out and avoids the inclusion of inheritance tax for their owners, benefits that are not otherwise available if individual owners own the policies. It also avoids poor tax results when an owner leaves the business and ownership of the directive needs to be adjusted. While incorporating an insurance LLC into a buyback contract can increase costs and complexity, the benefits of an insurance LLC can often outweigh those costs. Insurance LLC`s ownership is that of the operator and an independent person or agent should act as a manager. Each member of Insurance LLC must make capital contributions equal to the life insurance premiums for which that member is designated as an economic beneficiary, in accordance with the obligation to purchase the member of the operator`s purchase-sale contract.