Business Products

Buy and Sell Contracts

Numerous problems arise in a business when a partner, sole proprietor, shareholder or member dies. The only effective solution to these problems is a pre-arranged Buy-and-Sell agreement properly funded with life assurance. In this way, liquid reserves are immediately created. This will enable the survivors to pay out the deceased's share to his estate and carry on the business as a going concern.

  • coins.gifA definite agreement made by the partners obligating each partner to sell, at death, his interest to the surviving partners, and committing the surviving partners to purchase the deceased partner's interest.
    A method of valuing each partner's interest and an agreement on the price to be paid based upon valuation, this subject to periodic review.

Buy-and-Sell Agreements can be effectively used by Sole Proprietors, Partners, Shareholders in a Company and members of a Close Corporation.

Key Man Insurance

Keyperson insurance is life insurance affected by an employer on the life of an employee (the keyperson) whose services and know-how are instrumental in contributing to the turnover and profits of the business. The life policy is owned and paid for by the employer and when the keyperson dies or is disabled the proceeds are payable to the employer for its benefit.

In the same way as insurance can compensate an employer for loss suffered by fire, theft or water damage (the damaged or stolen asset can be replaced), life assurance proceeds can compensate the employer for the loss of a keyperson in that it keeps the employer's business operating by:

  • covering losses during the readjustment period;
  • paying the additional expenses of finding, employing and training a new employee; and
  • ensuring continuity of credit and helping to maintain the profitability of the business.

Deferred/Preferred Compensation

A deferred compensation plan is a contractual agreement between an employer and employee in terms of which the employer undertakes to provide the employee with an award which is deferred until retirement, death or which binds the employee to a period of service for a specific period that the employer chooses.

This award acts as an incentive to retain the services of valued employees.

The deferred compensation award can be funded in any way. However, if funded by life assurance then the provisions of the Income Tax Act allow for tax advantages in the funding of such an award.

 

Pension/Provident Fund

Pension and provident funds contribute to the welfare and efficiency of an organization and its employees in a number of ways.

Not only are security and stability of employment increased if the staff are assured of an adequate pension on reaching normal retirement age, but from the employers viewpoint the overall efficiency of the organization is likely to be increased if there is an orderly retirement of senior employees at a reasonable age which will allow for employment and promotional opportunities for younger an more vigorous employees.

Also, an insured pension or provident fund will relieve the employer of the moral responsibility to provide maintenance to the widow and children of an employee who dies while in the service of the firm or to the employee him or herself should he/she become incapacitated during his/her working lifetime.

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