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BUSINESS INSURANCE PARTNERSHIPS
When a partner dies, the partnership is automatically dissolved by law.
In the absence of an express agreement, the surviving partners face the following alternatives:
 Liquidation
- A forced sale attracts bargain-hunters, with assets sold at sacrifice prices
- With Goodwill gone, value of the business is drastically reduced (40% to 90%)
- Surviving partners are out of a job
Reorganization
- Surviving partners may seek a new partner
- Finding a purchaser with enough skill, money, compatibility or professional designation may be difficult
- Convincing the heirs to sell for an agreeable price in time to prevent forced liquidation by creditors may be impossible
Borrowing
- The cost of borrowing to buy out a deceased partner's shares may prove extremely costly
- Satisfactory credit arrangement may be difficult
There is a Better Solution!
Partners agree by contract (a Buy-Sell agreement) that:
- The interest of any deceased or disabled partner will be purchased by and sold to surviving partners in the event of death or disability
- The value of respective interests, or a method of determining them, will be clearly set forth
- The method of financing the purchase be clearly defined
Business life and disability insurance create the funds to finance transfer of business interests thereby:
- Providing sufficient cash immediately and economically
- Freeing operating capital for normal business requirements
- Eliminating additional borrowing or invading of personal resources
ADVANTAGES OF BUSINESS LIFE AND DISABILITY INSURANCE
To Surviving Partners - Guarantees full ownership of the business
To Their Heirs - Guarantees full value of their interest in the business in cash
To the Business Today - Guarantees business continuity and strengthens its position with customers, creditors and competitors
Today the choice is yours. Which will it be?
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