More Information about
Business Continuation Strategies
The advantages of a written business continuation plan include:
Helping to ensure the survival of the business in the event of the death or disability of a current owner or key employee.
Helping to ensure you or your family receive full and fair value for your interest in the company.
Setting the value of the business or estate planning and for estate taxation purposes.
Giving you the opportunity to determine which of your heirs may continue your business, and taking steps if you choose to equalize the inheritance to other heirs through other means.
Meeting the requirements of lenders or key strategic outside parties who may require there be a business continuation plan in place that would address the death, disability, or retirement of an owner or key employee.
In many instances, a business continuation agreement can be funded with life insurance and/or disability insurance to ensure funds are available to execute the agreement, should something happen to a partner or key employee. Nearly every business owner prefers a funded business continuation plan. Your concerns about funding the plan with appropriate insurance may include:
Can you and your partners each qualify for insurance, or would your current health or age preclude you or them from being able to secure coverage?
Will the premiums for the insurance coverage be affordable? Can the current business cash flow reasonably pay the premiums necessary to have adequate coverage?
We have strategies to address these concerns:
Can you qualify for insurance? Determining if you and your partners can qualify medically for insurance coverage sometimes requires extra effort to ensure you are getting coverage under the most competitive terms possible. To accomplish this, we use our proven Clifton Capital Insurance Marketplace Assessment (CCMA). The Assessment involves us working directly with the lead underwriters of the major insurance companies. We are able to do so through our private network of relationships, our industry tenure, and demonstrated history of placing business with carriers. We are also able to access any current underwriting concessions offered by major companies. Our process allows us to have each company compete for the coverage, and allows us the opportunity to negotiate directly on your behalf to place the insurance.
Feel free to contact us for more information about the Clifton Capital Insurance Marketplace Assessment (CCMA), and about the results obtained for other insurance buyers.
Will the premiums for the insurance coverage be affordable? Life insurance premiums have dropped significantly over the past 20 years. As the internet has brought about intense competition, insurance companies have learned more about health conditions that no longer significantly shorten life expectancy, thereby making the insurance company willing to issue life insurance on buyers with a range of medical histories. And the progress of medicine over the past two decades is extending average lifetimes, which has resulted in additional decreases in the cost of insurance. These reductions can benefit you directly.
Many buyers of larger insurance amounts choose to finance the insurance premiums through specialty finance companies or commercial lenders. This can create the ability to pay for substantial amounts of life insurance with potentially much lower ongoing out-of-pocket costs. We work with life insurance companies who understand the use of premium financing, as well as the companies providing premium financing to help clients design a winning strategy. Feel free to contact us for more information and for examples of this strategy and how it might enable you to have the life insurance coverage you need, while reducing your out-of-pocket costs.
*Cambridge does not provide business valuation services and clients should consult with an attorney to discuss the specific details of a written business continuation plan.