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Business Continuation

Prepare for the continued success of your business, in the event:

  • you become disabled;
  • you are diagnosed with a critical illness; or
  • you die.

Business continuation planning tools can help you avoid the problems that can occur when a business owner becomes disabled, suffers a critical illness, or dies. An insurance funded business continuation plan provides a wide variety of benefits for you, your family and the business.  Circumstances will vary depending on the severity of a disability or critical illness, however, there is no recovery from death. It is recommended to plan for the unexpected.

Considerations for your family: 

  • Prevents conflict with surviving owners;
  • Assures a fair price for the business;
  • May set the value of your business for estate tax purposes; and
  • Can provide cash for your estate.

 Considerations for the business:

  • Allows you to maintain control of the business;
  • Prevents disputes;
  • Assures orderly transfer of the business upon death; and
  • Provides an income tax-free death benefit to purchase shares of the business.

Several business continuation plans are available:

Business Overhead

During a disability, revenue and savings can diminish rapidly. Expenses may not. How would you cover your monthly business overhead expenses?  Business Overhead reimburses eligible business expenses that remain the responsibility of a business owner during a disability.

Cross Purchase Plan

An agreement between co-owners of a business. Surviving owners purchase pro rata shares of the deceased owner's shares from the estate. To fund the purchase, each shareholder owns, pays premium on and is the beneficiary of an appropriate amount of life insurance on the other owners.

Share Redemption/Entity Purchase Plan

The business becomes obligated to purchase the shares or partnership share of a deceased shareholder or partner. The business owns, pays premium on and is the beneficiary of life insurance on each shareholder or partner.

Life Cycle Buy-Sell

Combines the benefits of the traditional share redemption and cross purchase methods. Provides several benefits, including the ability to supplement retirement income and allocate the premiums as desired.

One-Way Buy-Sell Agreement

Allows a single key employee or an outsider to purchase the business outright from the business owner's family using the death proceeds from a life insurance policy following the business owner's death.

Consult your Independent Insurance Advisor, attorney and financial professionals for more information about creating a Business Continuation Plan that's right for you.