Buy Sell Insurance Toronto

Buy Sell insurance is a crucial policy for business owners to have to protect their companies and families in the event of a change in ownership structure.

Many businesses operate as a joint venture between multiple partners or co-owners, each owning a proportionate amount of the company. While this allows partners to pool their resources and bring multiple different expertise to the table, it also complicates things should the relationship break down or one of the partners becomes gravely ill or passes away. In these scenarios, it is usually up to the remaining partners to buy out the lost partner’s share in the company, potentially leaving them with a huge bill.

Buy Sell insurance provides a safety net for these worst case scenarios, giving the remaining business owners the capital they need to continue growing their brand for years to come.

What is Buy Sell Insurance?

Buy Sell insurance is a specific kind of insurance that comes into effect in the event of a business partnership breaking down, or a partner is no longer able to perform their duties and must be bought out of the company.

When most people start a new business, they are convinced that nothing will ever happen to the business relationship. They will always see eye to eye, they will both be in perfect health for decades, and considering anything other than that is a waste of time. Unfortunately, the reality of the situation is often quite different, and these worst case scenarios can come to pass. Should one partner suddenly pass, the remaining partners will often feel stuck with having to purchase the remaining ownership of the company from the next of kin. This can lead to further tensions, both financial and personal.

Buy Sell insurance offers a lifeline during a difficult time by providing the financial capital necessary to secure the future of the company. In essence, it functions as life insurance for each of the partners in a company, providing the surviving owners with the funds required to buy out the remaining ownership portion of the company. This safeguards not only the future of the business, but also the family of the deceased partner.

Close up of business partners shaking hands with buy sell insurance

Why is Buy Sell so Important?

While seldom used, Buy Sell insurance is actually incredibly important for any business owner that is in a partnership.

If you are wondering whether Buy Sell insurance is actually that important for you, ask yourself whether you could afford to take over the ownership portion of your business partner should they no longer be able to run the business. Could you afford to pay out 20%? 30%? 50%? Very few people would be able to come up with the funds themselves, which would mean expensive business loans, or potentially going into business with someone you do not know very well. Buy Sell insurance makes sure you have the money necessary to cover the buyout, so you can remain in business without relying on outside sources for funding.

What Does Buy Sell Cover?

Buy Sell insurance in Toronto provides financial assistance in the event that a business partner is no longer able to perform their duties. The specifics of your cover can be customized, but will generally include:

  • Life insurance: In the event of one of the business partners passing, Buy Sell life insurance will provide a lump sum of cash that can be used to buy out their share in the company. This saves the remaining owners from having to use personal funds or business assets to fund the purchase.
  • Disability insurance: Buy Sell insurance can also come into play should one of the owners become permanently disabled and unable to continue as a business partner. The policy would provide cash to purchase their stake in the company.
  • Varied Policy Ownership: Buy Sell insurance policies can be taken out by the business as an entity, or each business partner can take out a Buy Sell policy on each of the other partners.

Despite best intentions, business partnerships do not always go according to plan. Having a comprehensive Buy Sell insurance policy in place and protect your business from facing financial hardship in the event of catastrophe.

Who Needs Buy Sell Insurance?

Buy Sell insurance is ideal for any business owner that jointly owns a business with one or more partners.

In the event that one of the business partners’ shares must be bought out, the only options available are generally personal funds, business assets, or taking out a business loan. These are all undesirable options, as they will involve an opportunity cost for capital investment, and can cause the business to struggle financially if the buyout is significant.

Buy Sell insurance ensures you do not have to worry about how you will fund the buyout, as it provides a cash injection that can be used to cover the purchase. This protects the business and the remaining partners from footing the bill, while also ensuring the lost partner’s next of kin are looked after as well.

Why go with KASE Insurance?

As Toronto is the business capital of Canada, and new businesses face greater financial stress than ever before, having an effective Buy Sell insurance policy is crucial. In the event of a business partner no longer being a part of the company, Buy Sell insurance can protect you, your business, and your family from suffering any financial fallout. KASE Insurance is proud to be the leading commercial insurance broker in Toronto offering completely customized Buy Sell insurance policies to businesses of all sizes.

Our insurance experts take the time to learn everything there is to know about your business so we can provide the most informed and comprehensive recommendations possible. We leverage our extensive network of insurance providers to source policies that meet all of your needs with the lowest premiums around.

Contact us today and find out how we can help you safeguard your business into the future.