Term Life Insurance Definitions helps the buying public to become more knowledgeable of term life insurance and  permanent life insurance.

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Business Continuation
  
 


Closely Held Corporations: Corporate Buy Sell Agreements

Business continuation of a closely held corporation almost always requires a corporate buy sell agreement.


 Business Continuation: The Problem Explained 

The death of a stockholder does not legally dissolve a closely held corporation. Problems make the retirement of the deceased's interest in a closely held corporation a necessity. A Corporate Buy Sell should always be considered.

 get a quote More about the problem

 
 The Solution

A properly drawn buy-and-sell agreement financed by life insurance.

Definition 

A buy-sell agreement binds either the surviving stockholders or corporation, to purchase the stock of the deceased stockholder at a prearranged price set forth in the agreement and obligates the estate of the deceased stockholder to sell his stock to the surviving stockholders or the corporation.

get a quote  As in the case of the partnership agreement, each stockholder's interest is valued at the time the buy-sell agreement is drawn up and periodically revalued.

get a quote  Each stockholder is insured for the amount of stock interest owned, the insurance being owned by either the corporation or the other stockholders.


get a quote  Upon the first death among the stockholders, the life insurance proceeds are used by the corporation or surviving stockholders, purchase the stock of the deceased from his or her estate.


get a quote  The business future of the survivors is assured and the heir(s) receives cash instead of a speculative interest.


The Conclusion-

Life insurance is the best means of financing a business transfer

Any buy-sell or business continuation agreement is dependent upon the accumulation of a cash sinking fund. 

Any buy-sell or business continuation agreement is dependent upon the accumulation of a cash sinking fund. 


Analysis will show that all other available financing arrangements are likely to be unreliable and inadequate.

 get a quote  The fact that the plan must produce the prearranged amount of cash at the time death calls for a fund.

get a quote  An accumulating sinking fund requires time at an assumed rate of interest, to reach a stated amount. If death of the stockholder or partner occurs early, little would have been accumulated.

 
 get a quote  More about the conclusion

   
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TermLifeAmerica.com- Lewis Fink is licensed as an insurance agent offering Life Insurance in the following states: Alabama - AL, Arkansas - AR, California - CA, Colorado - CO, Connecticut - CT, Delaware - DE, District of Columbia - DC, Florida - FL, Georgia - GA, Idaho - ID, Illinois - IL, Indiana - IN, Iowa - IA, Kansas - KS, Kentucky - KY, Louisiana - LA, Maine - ME, Maryland - MD, Massachusetts - MA, Michigan - MI, Mississippi - MS, Missouri - MO, Montana - MT, Nebraska - NE, New Mexico - NM, New Jersey - NJ, New York - NY, North Carolina - NC, North Dakota - ND, Ohio - OH, Oklahoma - OK, Pennsylvania - PA, Rhode Island - RI, South Carolina - SC, South Dakota - SD, Tennessee - TN, Texas - TX, Utah - UT, Vermont - VT, Virginia - VA, and Wisconsin - WI.  


Not all insurance products from all insurance companies are available in all states.
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