Better ‘Buy-Sell Strategies’ Can Boost Premium

HOLLYWOOD, Fla. -- Executing a buy-sell agreement is one of the most important and responsible tasks a business owner can undertake.

So it is surprising that so many of these agreements are done inefficiently, said Joe Ross, vice president of sales productivity and business development for AIG Financial Distributors.

Ross will share some off the issues and describe potential solutions for the buy-sell conundrum today at the NAILBA36 Annual Meeting.

He also will discuss a way to fund buy-sell agreements with life insurance that may allow the funding to be triggered by death, health issues and longevity.

“Most buy-sell agreements are funded with term life insurance, which rarely pays a death claim,” Ross said.

There may be other options in the use of permanent products. Buy-sell refers to a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies, is otherwise forced to leave the business or chooses to leave the business.

In addition, attendees will discover four ways money may be easily accessed when needed either to consummate the buy-sell or to exit the strategy.

“If done the right way, the clients end up with a better plan,” he stressed. “It’s a win-win.”

Most agents have spent their careers trying to figure out which approach to buy-sell works best, Ross noted, considering stock redemption or cross purchase or trusteed cross purchase, or maybe something else.

“We’ll review the pros and cons of the most popular methods, and then I will introduce the newest cutting-edge approach to planning that retains the benefits of the other strategies while potentially shedding the detriments,” he said.

Buy-sell planning has evolved for the better and broker/agents are well served to learn the latest strategies.

“If you’re in the buy-sell planning business, now you can do something your competition doesn’t know about, putting you at the forefront of buy-sell planners,” Ross said.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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