1. When do I need to consider Business Ownership Protection?

Following the death or incapacitation of a business owner, questions such as “who am I now in business with?” can be very distracting and unsettling for the remaining business owners.

The ability for the shareholders to buyout a deceased or disabled business partner’s shares could depend on their own personal financial positions and/or the size and maturity of the business.

If the exiting shareholder was also a key person to the business, determining the real value of the business moving forward may be questioned by the remaining shareholders.

Creating certainty around the value you would receive for your shares should die or become incapacitated also assists in the effective planning of personal insurance protection.

If you want to ensure your estate receives fair value for your business shares should you die or become too disabled to continue to work then talk to us to see how we can assist.

2. What types of insurance do I need?

This depends on what trigger events would require the transfer of shares.

In a stable and mature business, shareholders may be willing to wait until a disability is considered long-term or permanent before exiting a shareholder. In those circumstances life insurance and permanent disablement insurance can be sufficient.

In a fast growth or start-up business it may be important to exit an incapacitated shareholder more quickly so that a replacement can be found. In these circumstances, a broader disability definition may be required.

Cost and the amount of insurance required may also be a contributing factor to the end solution.

Advice Plus will support you through this decision-making process so you clearly understand what type of solution you require for your business.

3. How do I determine how much insurance I need?

Advice Plus will work with you and your accountant to understand the current value of your business. This does not necessarily need to involve formal, expensive valuations.

We can also discuss with you how much of the purchase you may be able to afford to finance based on the current performance of the business and its potential change in performance following the loss of the key shareholder.

Again, cost of cover, types of benefits and the shareholders desire to self-insure are all factors in this decision-making process.

Advice Plus will facilitate this discussion so you can decide what is best for you.

4. How hard will it be to increase my cover as my business grows?

Modern insurance policies have the option to include Future Insurability. This enables the shareholders to increase cover as the business grows without having to continually complete application forms and provide medical information.

Where possible, Advice Plus recommends the use of Future Insurability options to provide more certainty around future insurance requirements.

5. What other things do I need to consider?

Other factors to consider in ensuring the correct structure of Business Ownership Protection include:

Policy Ownership – How should your policies be owned to ensure your insurance ownership is structured as

effectively as possible?

Shareholders Agreement – What are the current obligations under your existing

shareholders agreement?

Buy-sell agreement – Is a specific buy-sell agreement required around your insurance


Premium Payments – How should the premiums be managed or split between shareholders?

Taxation – How should premiums be taxed in the business?

Advice Plus will review all of these with you to help ensure your insurance solution is structured to work when you need it.