Buy-Sell Strategies

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Two business owners have a large age spread. They want to fund a cross-purchase buy-sell agreement but equalize their premium costs.


A permanent life insurance product to equalize both premiums is recommended.


Here’s an example of how it works.

The business value equals $200,000, each partner owns 50 percent. John is 35, bob is 55 and both are in good health. With most insurance plans, John will pay significantly higher premiums for Bob’s insurance than Bob will pay for John’s because of the substantial age difference.

A specially designed permanent life insurance product solves this problem. In our example using current assumptions, John can pay an annual levelized premium of $2,025 for a $100,000 policy on Bob. Bob pays the same annual levelized premium for the same $100,000 death benefit on John. They both pay premiums for 10 years, assuming Bob will retire at age 65. Then, each will take over their own policy and continue to pay premiums if necessary.


Premiums are equalized for both clients. However, Bob will have more cash value in his policy, because John is younger and more funds are going into the cash values.

Term life insurance is also a viable solution, however, it is more difficult to equalize the premiums.

Let us help you maximize your success. Why not get a quote for the protection you need?