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What is a Buy/Sell Agreement and what is Buy/Sell Insurance?
Definition -
A Buy/Sell Agreement is an approach used for sole proprietorships, partnerships, and
closely-held corporations in which the business interests of a deceased or disabled
proprietor, partner, or shareholder are sold according to a predetermined formula to the
remaining member(s) of the business. .
For example, a partnership has three principals. Upon the death of one of the partners,
the other two surviving partners have agreed to purchase, and the deceased partner's
estate has agreed to sell, the interest of the deceased partner according to a predetermined
formula for valuing the partnership to the survivors.
The funds needed for buying out the deceased partner's interest are usually provided by
life insurance policies, with each partner purchasing a policy on the other partners. Each
is the owner and beneficiary of the policies purchased on the other partners. This type of
insurance is sometimes referred to as Buy/Sell Insurance.
When a sole proprietor dies, usually a key employee is the buyer/successor. The sole
proprietorship, partnership, and close corporation under the entity plan can buy and own
life insurance policies on the proprietor, partner, or shareholder and achieve the same
result as when an individual buys and owns the policies.
We Help Make Buy/Sell Insurance Easier
Starting the process is as easy as picking up the phone and calling our office or clicking
on the button below and completing the online form. No sales pressure, no confusing
insurance language, no worrying about which company to select. We are an independent
insurance agency and have access to dozens of insurance companies. Let us help guide
you and make the process easier for you.
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