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More Information about A Buy-Sell Plan or Business Continuation Strategy

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 the full value for your interest in the company.
  • Setting the value of the business or estate planning and for estate taxation purposes.
  • Allowing you 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 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 typically come to cost and your ability to qualify.

  • 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 (CCIMA). The Assessment involves working directly with the lead underwriters of the major insurance companies. We can 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 (CCIMA), 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.  The internet has brought about intense competition, and improvements in medicine mean conditions previously considered high risk are now often easily managed.  These factors have combined to change life insurance pricing. 

Many buyers of life insurance choose to finance premiums through specialty finance companies or commercial lenders. Financing the premiums can provide the means to secure substantial amounts of life insurance with lower 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 potentially reducing your outlay.

*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.

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