Buy–Sell Insurance Advice
Enable a smooth ownership transition with cover for your organisation’s buy–sell agreement.
THE MiQ DIFFERENCE
What Makes Us Leading Insurance Advisers?
Too many financial advisers recommend insurance policies based on the commissions they receive – not what’s best for your business.
But MiQ is different.
Our approach is holistic: a detailed analysis of your succession plan to see what level of cover is required.
We’re paid by commission – but our diverse APL means there’s no incentive for us to recommend a particular insurer.
And we have access to a network of both internal and external specialists, such as accountants and solicitors, who can support your strategic objectives.
Protecting your business’s continuity starts right here, with us.
“I’m not one to leave reviews but my recent interaction with Kylie has been so pleasant and seamless, I could not, not share the experience. She has been prompt and transparent with me through the whole process, which has made it a lot less stressful, and I could not thank her enough for it.”
Our Buy–Sell Insurance Solutions
What We Do
Funding a buy–sell agreement doesn’t need to involve capital outlay or new debt.
With buy–sell insurance, your business can buy out the interest of an owner who has died or is unable to work due to injury or illness.
The result is a frictionless transition of ownership – one that avoids business disruptions and maintains your company’s growth trajectory.
Your MiQ adviser can help you source buy–sell insurance that aligns with your organisation’s needs.
But, more importantly, our collaborative framework means that we’ll coordinate with other professionals on your team, like commercial solicitors and tax specialists, to deliver holistic advice that goes beyond policy selection.
Schedule a consultation to find out more about how we support businesses with strategic succession planning.
If your company has multiple owners, making a buy–sell agreement part of your succession planning – what happens when an owner dies or becomes unable to fulfil their duties – is critical.
But a buy–sell agreement needs a funding mechanism: a way for either the company or remaining owners to buy back the departing owner’s shares.
Instead of relying on capital, personal savings, or loans, buy–sell insurance provides life, TPD and/or trauma cover for each owner, delivering a lump-sum payment to the policy owner if a trigger event takes place.
Combined with key person cover, buy–sell insurance helps minimise business disruptions during unexpected transitions.
Book a meeting with an MiQ advisor to explore the best ownership mechanisms and policy options for your organisation.
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Your Buy–Sell Insurance Questions, Answered
A buy–sell agreement is a way for owners of a business to buy out another owner’s share of the business if that owner dies or becomes unable to work. Under an agreement, the remaining owners will pay the departed owner (or their estate) an agreed-upon sum for their interest if a specified trigger event occurs.
Buy–sell agreements are an important part of business succession planning because they eliminate the risk of business control being lost. If a business owner died with no agreement in place, for example, then their interest would form part of their estate, in which case their beneficiaries could sell it to a third party or involve themselves in the business. In the event of non-fatal disability or trauma, the departing business owner could take time to sell their interest, or, if they lost decision-making capacity, their appointed attorney could make business decisions in their stead.
Finding the right ownership structure for your buy–sell insurance isn’t always straightforward. Different ownership options have different risk and tax implications, and may vary in setup complexity. Often, the company will own the policies; when a trigger event occurs, the company buys back the departing owner’s shares with the insurance proceeds.
Other ownership structures include:
- self-ownership (where each owner owns their own policy)
- joint ownership (where all owners jointly own each policy)
- cross-ownership (where each owner owns policies on the other owners)
- business insurance trust (where the policies are jointly owned by the insured owners and the trustee of a special purpose trust)
- super fund ownership (where the policy is owned by a retail fund; SMSFs can’t own buy–sell insurance).
The tax implications of receiving proceeds from buy–sell insurance vary between policy types and ownership structures. If you’re thinking about implementing a buy–sell agreement in your business, work with a holistic financial advisor to identify the best type of funding (which may not always be insurance); they can then coordinate with your accountant, solicitor, and tax specialist to draft an agreement and set up the funding mechanism.
Insurance is often the best way to fund a buy–sell agreement, but it’s not the only available mechanism. Other options include using the remaining owners’ personal savings, using the company’s capital, taking out a loan (either through the company or the remaining owners), or implementing a deferred purchase agreement.
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