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Is your business prepared for the unexpected? Could your business survive the loss of a partner?
For businesses with multiple owners, securing continuity and protecting key assets is essential. Two powerful strategies to safeguard your business are Buy-Sell Agreements and Key Person Insurance. These solutions provide financial stability and peace of mind, ensuring your business thrives through any transition.
Imagine this: Your business partner suddenly falls ill or passes away. In an instant, your business loses a key player. You’re faced with the challenge of compensating their family for their share, and without a plan in place, inexperienced family members could become partowners, leading to uncertainty and potential conflicts. On top of that, supporting an ill partner can quickly become a financial
strain, making it harder to keep the business running smoothly.
These moments can shake the foundation of your business. The question is – are you prepared?
A Buy-Sell Agreement is a crucial safeguard, but without the right funding, it’s just a plan on paper. To ensure a seamless transition, you need financial backing, and that’s where insurance plays a vital role. It provides the liquidity needed to execute the agreement, protecting your business and giving you peace of mind.
With a well-structured insurance plan, each business partner is covered by Life and Total Disability Insurance (TPD). If something happens, the insurance funds the buyout, ensuring ownership transitions smoothly without financial strain. This protection eliminates disputes, prevents delays, and allows the business to continue operating without disruption.
By putting the right safeguards in place, you can focus on building your business, knowing that you’re prepared for whatever the future holds.
What about the people who aren’t business owners but are still critical to your success? Losing a key employee – whether a top executive, a lead salesperson, or a technical expert – can create financial and operational challenges.
That’s where Key Person Insurance comes in. Also known as Key Man Insurance, this coverage is designed to shield your business from the financial fallout of losing a vital team member.
How Key Person Insurance Works
Your business takes out an insurance policy on the key individual, pays the premiums, and, if the unexpected happens – whether death or disability – the company receives a payout. This financial support helps offset the impact of their absence, ensuring stability and continuity.
Key Person Insurance can help cover: If losing a particular employee would significantly affect your business, it’s time to consider this coverage. Ask yourself:
+ Would their absence disrupt revenue?
+ Are they essential to maintaining supplier or client relationships?
+ Do they play a critical role in shaping company strategy?
If the answer is yes, Key Person Insurance should be part of your business risk management plan.
Who Needs Key Person Insurance?
If losing a team member significantly impacts your business, it's time to consider this coverage. Ask yourself:
+ Would their absence affect your revenue streams?
+ Are they crucial to maintaining supplier relationships?
+ Do they play a vital role in your company's strategic direction?
Tax Considerations
While premiums may be tax-deductible in some cases, benefits received could be taxable. It's important to consult with a tax professional to understand the implications for your business.
With a Buy Sell Agreement and the right insurance in place, you can:
+ Maintain Business Stability during tough times.
+ Protect Partners' Interests fairly and transparently.
+ Have a Clear Plan for when partners leave unexpectedly.
+ Ensure Funds for Buy-Outs without draining resources.
+ Safeguard Against Key Employee Loss with Key Person Insurance.
This combination safeguards your business's future while giving everyone involved confidence and security.
At Kelly+Partners Private Wealth, we build strategies to protect what you've worked so hard to create. Let us help you secure your business legacy.
At Kelly+Partners Private Wealth, we’re more than just insurance providers – we’re your partners in securing your future. Our team is dedicated to helping you protect what matters most with expert guidance and tailored solutions designed to fit your unique needs and budget.
We take a personalised approach, ensuring your insurance plan aligns with your lifestyle, financial goals, and long-term security. With access to comprehensive coverage options, we protect every aspect of your life, from safeguarding your income to preserving your legacy for future generations.
Don’t leave your financial future to chance. Contact us today to discover how our personal insurance solutions can provide lasting peace of mind and the financial protection you deserve.
Leanna Katsikaris
Client Director – Insurance
Adv. Dip (FS) FP
Leanna is a Business Succession Insurance Specialist with more than 20 years of dedicated experience in the financial services industry, bringing a wealth of knowledge to the table. Throughout Leanna's career, she has honed her expertise in both personal and business insurance, and in doing so, uncovered the intricate connection between individual and business requirements. Leanna's unique insight into this symbiotic relationship has enabled her to craft highly effective strategic contingency plans for her clients. Leanna prides herself on working in close collaboration with business owners and their trusted professional advisors, tailoring insurance solutions that are not just meaningful but also aligned with their specific needs. Leanna's goal is to provide comprehensive insurance advice that goes beyond protection, safeguarding both personal and business interests and ensuring a secure and prosperous future.
Kim Lim
Private Wealth – Operations Director Bsc (Psyc), MComm (Fin)
Kim has more than 15 years of experience in both wealth management operations and client management. Kim joined Kelly+Partners Wealth Management from BT Financial Group, where she was the manager of the Private Wealth Markets operations team. Here, she oversaw the overall operations and investment settlement process for the private client business. Prior to this, she held senior operational and client management roles with Commonwealth Bank Securities and Optivar. Those roles provided her with indepth knowledge and experience, which allows her to provide a high level of service and execution for our valued clients.
Whether you're navigating partnership risks or safeguarding essential team members, having the right insurance in place can mean the difference between business continuity and financial disruption.
At Kelly+Partners Private Wealth, we help business owners like you create clear, strategic plans that protect what you’ve built, no matter what the future holds.
Book a complimentary strategy session with Leanna Katsikaris to explore how Buy/Sell and Key Person Insurance can safeguard your business, your partners, and your peace of mind.
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