A BRIEF EXPLANATION…
The key objective of business succession planning is to ensure that the business survives and continues to function in the event of death, disablement and/or a traumatic illness of one of its principles.
1. BUY/SELL AGREEMENT
A Buy/Sell agreement provides for business continuation with a minimum of disruption by creating an agreement between business partners for the purchase of each other’s share in the event of death, disablement and/or a traumatic illness. The remaining owner/s need money to buy out the deceased owners share from their estate. Funding is usually Life cover, TPD and TPD cover.
2. KEY PERSON INSURANCE
Key Person Insurance covers the financial ramifications caused if a key person dies or suffers a traumatic illness or Total and Permanent disability. It can provide funding for any outstanding debts and also stabilises the business if a key person/employee becomes incapacitated or dies. There are two styles of key person cover:
KEY PERSON INSURANCE
Key Person Insurance covers the cost of replacing the income loss resulting from a defined event and compensates the equity owners of the business from loss of profits they could suffer.
KEY PERSON CAPITAL
Key person capital is used to replace any capital losses suffered as a result of a key persons death, disability and/or traumatic illness.
3. GUARANTOR PROTECTION
Guarantor protection ensures that upon death, disablement and/or a traumatic illness of a business owner whom has provided guarantee for a loan, the loan can be extinguished. This ensures that the business is free from financial burden as most of the banks will seek repayment as this can be seen as a default.
4. BUSINESS EXPENSE COVER
Business overheads helps to keep your business running if you are unable to work due to sickness or injury. This cover provides a regular payment, generally per month in arrears. It can be used to pay 100% of eligible business expenses like electricity, gas, rates and rent. Its purpose is to take the pressure off you whilst sick or injured so you can focus on recovering knowing that you have taken care of your day-to-day business expenses and helps protect your livelihood by giving your business the cash flow it needs to cover day-to-day expenses, so you can focus on your recovery. Premiums paid are generally tax deductible.
The Mirus Group trading as McFarlane Orr and Co is an Authorised Representative (ASIC Corporate AR No. 262094) of Securitor Financial Group Ltd, ABN 48 009 189 495 AFSL 240687