{"id":210,"date":"2019-04-12T10:26:39","date_gmt":"2019-04-12T10:26:39","guid":{"rendered":"https:\/\/www.innov8fs.co.za\/blog\/?p=210"},"modified":"2026-03-18T11:46:48","modified_gmt":"2026-03-18T11:46:48","slug":"financial-solutions-for-business-owners-buy-and-sell-insurance","status":"publish","type":"post","link":"https:\/\/www.innov8fs.co.za\/blog\/2019\/04\/12\/financial-solutions-for-business-owners-buy-and-sell-insurance\/","title":{"rendered":"Financial Solutions for Business Owners: Buy-and-Sell Insurance"},"content":{"rendered":"<p><strong>The Need:<\/strong><\/p>\n<p>When a co-owner in a business dies, the affected owner\u2019s estate can be left severely exposed, but the remaining owners could also face potential problems. The potential challenges created for the deceased owner\u2019s estate:<\/p>\n<ul>\n<li>The remaining owners might not have the resources to purchase the shares from the estate;<\/li>\n<li>The spouse may not want to participate in the business which means that he\/she is left at the mercy of the existing owners;<\/li>\n<li>The deceased owner may have had unique skills that he\/she brought to the business, meaning that the risk in the business increases if those skills are no longer available to the business;<\/li>\n<li>The deceased owner may have earned a salary in the business, and when he\/she dies the spouse cannot simply claim that salary unless he\/she actually works in the business on the same basis as the deceased owner. The potential challenges created for the remaining owners<\/li>\n<li>The executor of the estate of the deceased owner might interfere in a business about which he\/she knows nothing;<\/li>\n<li>He\/she might want to sell the owner\u2019s interest to the highest bidder, opening up the business to foreign investors; and<\/li>\n<li>The existing owners may not have the funding to repurchase the deceased owner\u2019s interest at that stage.<\/li>\n<\/ul>\n<p>The alternative to insurance is to borrow, from a commercial bank, the money needed to buy the deceased owner\u2019s share. However, even if the business is successful in obtaining such a loan, the terms and repayment period could possibly make it unaffordable from a cash-flow point of view. In most cases, insurance would therefore be the more affordable solution.<\/p>\n<p><strong>The Buy-and-Sell Solution:<\/strong><\/p>\n<p>The primary purpose of a buy-and-sell arrangement is to provide the surviving partner(s) with cash to purchase the interest of a deceased or disabled partner. A buy-and-sell solution provides a smooth exit for a partner in the event of death or disability. This agreement ensures continuity of business in the event of the death or disability of an owner.<\/p>\n<p style=\"font-weight: 400;\">Source: Sanlam\u00a0<a href=\"https:\/\/www.123ob.co.za\/memberzone\/businessbriefcase\/documents\/buyandsell\/whybuysellinsurance\/BS%20flash%20fact%20(E).pdf\" data-saferedirecturl=\"https:\/\/www.google.com\/url?q=https:\/\/www.123ob.co.za\/memberzone\/businessbriefcase\/documents\/buyandsell\/whybuysellinsurance\/BS%2520flash%2520fact%2520(E).pdf&amp;source=gmail&amp;ust=1555148256462000&amp;usg=AFQjCNG8xgCmdcyQQZ0YLfZtXTwdrmRV7Q\">https:\/\/www.123ob.co.za\/memberzone\/businessbriefcase\/documents\/buyandsell\/whybuysellinsurance\/BS%20flash%20fact%20(E).pdf<\/a><\/p>\n<p style=\"font-weight: 400;\">FSB licence no: 22205<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Need: When a co-owner in a business dies, the affected owner\u2019s estate can be left severely exposed, but the remaining owners could also face&hellip;<\/p>\n","protected":false},"author":1,"featured_media":212,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-210","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-innov8ions"],"_links":{"self":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/210","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/comments?post=210"}],"version-history":[{"count":2,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/210\/revisions"}],"predecessor-version":[{"id":214,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/210\/revisions\/214"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/media\/212"}],"wp:attachment":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/media?parent=210"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/categories?post=210"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/tags?post=210"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}