Protecting Your Bread & Butter

If you own your own business, chances are it’s your livelihood. But what if something
happened to you or your partner and you were unable to continue operating it?

As a business owner you’ll need to consider the ‘what ifs’ should you or your business
partner exit the business involuntarily, if you know what I mean?

The solution is likely to be a buy-sell agreement coupled with an appropriate insurance
strategy that will provide emergency funding in the unfortunate matter of having to
unexpectedly buy-out the share of a departed or disabled business partner.

A buy-sell agreement is one option available for small and medium business owners to
protect their livelihood against death, disability or trauma.

It’s a legally binding contract between business partners, which facilitates the sale of
business ownership when certain ‘trigger events’ like death and disability occur.

While the purchase can be funded personally, it is also commonly done through insurance,
which can provide ready capital, which is often more cost-effective.

Using insurance to fund the agreement

There are many advantages to using insurance to fund a buy-sell agreement.

Firstly, it can help to protect your equity in the business if you suffer from an accident,
illness or death, as you (or your estate) aren’t forced to try and sell your share of the
business in a difficult and stressful time.

This could lead you to sell your share of the business for less than it’s worth, or worse still,
not be able to sell it at all.

Equally, it also protects the other business partners from having to work with your estate or
an unwanted business partner or from having to suddenly come up with funds to pay you

But how exactly does a buy-sell agreement through insurance work?

Basically, partners sign a legally binding agreement enabling the sale and purchase of
business equity in the event of death, disability or trauma.

Each partner also takes out an insurance policy, with the agreement stipulating that if a
trigger event occurs, the funds received from the insurance policy will be used to payout
their share in the business.
This means you, or your estate, would receive the payment, while the remaining partners
would receive your shares.

In many cases, having a buy-sell agreement via insurance is a sensible way to protect the

interests of all partners. All businesses are unique so it’s important to seek help from a
qualified professional in order to find the right solution for your business.


Paul Lewis Authorised Representative No. 262 180 is a director of Lewis Insurance Services Pty Ltd (LIS). Paul and
LIS are authorised to provide general insurance services only as authorised representatives of Insurance
Advisernet Australia Pty Ltd ABN 81 072 343 643 AFSL No 240 549. Paul is also authorised to provide financial
planning services only as an authorised representative of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535
AFSL 357306 trading as Fortnum Financial Advisers and nominee of Insurance Advisernet Financial Services Pty
Ltd ABN 19 132 170 337