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Make a Gross Comparison

Use this tip for business-continuation planning.

By Cliff Wilson, CLU, ChFC, LUTCF

In business-continuation planning, compare the gross sales required to generate enough net profit to fund the buy/sell agreement with the gross sales and net profit required using life insurance. In most cases, paying the premium is less than using your own profits or borrowing the money.

This is an excellent way to illustrate how the survivors can purchase the business at a discount. Just asking the business owner what the net profit to gross sale ratio is during the factfinding process will give you the needed information.

Cliff F. Wilson, CLU, ChFC, LUTCF is a NAIFA trustee. He is with Southeast Arizona Agency in Chandler, Ariz. You may reach him at 480-969-2725.

 


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