June 5th by Asero Insurance Staff 0 0Many business owners may be good at running their companies, but the majority of them are failing to address essential long-term planning that is critical to sustaining their businesses. The one area that the majority of business owners often neglect is planning for business continuity if they die or become disabled, according to the “2015 MassMutual Business Owner Perspectives Study”. While the question of your death or disablement is not one that’s fun to ponder, it makes good sense for business owners to put plans in place in case the worst happens. One of the key ways to ensure that is to have in place a buy-sell agreement, which would essentially sell your company in the event that you are unable to run it any longer. Business owners in the survey identified these concerns:
- The effect on the business of the death or disability of the owner or key employee.
- Protecting the business from disability and death of an owner or key employee had the second and third highest levels of importance (44% versus 42%, respectively). However, these two pillars were not very top of respondents’ minds, with 55% saying they rarely or never think about the effect of disability and 59% saying they rarely or never think about the effect of death.
- Of those with a buy-sell agreement in place, just over half said it was funded with life insurance, but only 5% said it was funded with disability buy-out insurance. The rest were either funded with cash flow from the business or not funded at all.