Viewing Question: My insurance agent is telling me I need a buy-sell agreement for my business. Is he just trying to sell me a policy?

My insurance agent is telling me I need a buy-sell agreement for my business. Is he just trying to sell me a policy?

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1 Response

  1. First of all, it sounds like you don’t trust your insurance agent. Try getting a second opinion from a planner who does not sell insurance and see what they have to say.

    More generally, when a business owner passes away, there are a lot of succession issues that may occur. For instance, if the business is your largest asset, and if it generates estate estate tax issues, the business may have to be sold or liquidated to cover the estate tax. A buy sell agreement that pays out life insurance can be used to offset the tax and allow the business to continue to operate or find a buyer on its own terms. Another example: if your business has several owners, if one owner passes away, the buy-sell agreement can be used by the others to pay out the owner’s family for the former owner’s interest.

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