Conducting a BuySell Review Maximizing life insurance sales
Conducting a Buy-Sell Review Maximizing life insurance sales opportunities For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Disclosures § § § The Voya® Life Companies and their agents and representatives do not give tax, legal or accounting advice. This information is general in nature and not comprehensive, the applicable laws may change and the strategies suggested may not be suitable for everyone. Clients should seek advice from their tax and legal advisors regarding their individual situation. These materials are not intended to and cannot be used to avoid tax penalties and they were prepared to support the promotion or marketing of the matters addressed in this document. Each taxpayer should seek advice from an independent tax advisor. Life insurance products are issued by Relia. Star Life Insurance Company (Minneapolis, MN), Relia. Star Life Insurance Company of New York (Woodbury, NY) and Security Life of Denver Insurance Company (Denver, CO). Within the State of New York, only Relia. Star Life Insurance Company of New York is admitted and its products issued. All are members of the Voya® family of companies. For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
The business market has many sales opportunities Sales can be made to: Owners, key employees & the business itself For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Business owners invest a lot in their businesses § They invest: – Time – Money – Passion § With no guarantee of success § Most successful owners want to protect what they’ve built For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Ownership of a business is temporary! Every owner will leave the business someday! § § § Death Disability Retirement Sale to Outsiders Liquidation at Death For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Many owners have buy-sell agreements § These agreements are sometimes called “business wills” § These agreements provide some degree of control and certainty § Control over identity of the owners and the price / terms on which an owner can leave the business § Certainty that there is a buyer and that there are funds available to complete the purchase For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Buy-sell agreements may become out-dated over time Over the years many things can change, including: § The economics of the business § The competition § The amount of investment required to remain competitive § The commitment and health of the owners § State/federal tax and regulatory laws § The owners’ personal circumstances and objectives For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Buy-sell agreements make important promises Agreements should be reviewed periodically to make sure the promises are realistic and can be kept For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Regular buy-sell reviews are important Two important components of a buy-sell review 1. Review the terms of the agreement, including: § Valuation formula / price § Triggering events § Terms of payment 2. Review the funds backing up the agreement, including: § Funding for when an owner sells during his lifetime § Funding for when an owner’s interest is purchased at death § Efficiency and viability of life insurance policies For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
New life insurance sales may flow from a buy-sell review Many agreements list death as a “triggering event” For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
“We don’t really need a buy-sell review now, do we? ” The challenge is to get their attention! Show them their agreement may have some “holes” in it. For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Why a review is important now! § The value of the business may have changed § Tough economic times often reduce a business’ value § If the agreement isn’t revised, the remaining owners may wind up over-paying! § If this is a good time to make ownership changes, it may be possible to accomplish them at a reduced cost: – – Redemptions Sales Gifts Stock bonuses For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
New sales tools for buy-sell reviews § 161434 – Important Questions in Buy-Sell Review § 160850 – Questions for Buy-Sell Review & Life Insurance Funding Analysis § 160851 – Buy-Sell Life Insurance Policy Review Factfinder for Business Owners For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Important Questions in Buy-Sell Review #161434 For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Designed to ask challenging questions § Direct and simple questions § Questions they may not be able to answer § Motivate the owner(s) to find out the answer § May potentially give you an opportunity to demonstrate some special experience or value For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Questions about the agreement § Does your agreement cover all the important transition events? § Does the agreement prevent you from passing on your interest to your spouse, children or grandchildren? § Does your agreement require the purchase of a departing owner’s interest, or is the purchase optional? § Will the implementation of the agreement result in a change in voting control? § Is the agreement designed to favor the remaining owners or the departing owner? For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Questions about the funding § If the business was sold to outsiders today, how much would you want for your interest? How much would you get under your buy-sell? § If you had to sell your interest today, how much money would you get? How much has been set aside? Where will the rest come from? How long will you have to wait for it? § Suppose something happens and you have to buy out another owner: How much have you set aside? Where will the rest come from? How much time do you have to get it? § When was the last time there was a formal review of your agreement and its funding? For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Questions for Buy-Sell Review & Life Insurance Funding Analysis #160850 For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Part one – Questions about the agreement Additional Questions § What are the triggering events covered? § Have owners signed Personal Guarantees for Business Loans? § Are there any non-owner key employees and have they signed non-compete agreements? For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Part two – Questions about the life insurance policies Additional questions § How does the inforce coverage compare with current business value? § Are ownership & beneficiary designations consistent with the agreement? § Are 101(j) forms necessary? If so, are they in place? § Is there Key Person coverage on each owner-employee? § Do the owners also have adequate personal coverage apart from the buy-sell coverage? For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Buy-Sell Life Insurance Policy Review Factfinder for Business Owners #160851 For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Buy-sell life insurance policy review factfinder A fact-gathering tool to help answer these questions: § What is the state of each policy today? § How is each policy likely to perform in the future? § What other life insurance options are available? § Are the life insurance policies a good value today? § Are they likely to be a good value in the future? For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Three new sales tools for buy-sell reviews § 161434 – Important Questions in Buy-Sell Review § 160850 – Questions for Buy-Sell Review & Life Insurance Funding Analysis § 160851 – Buy-Sell Life Insurance Policy Review Factfinder for Business Owners For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Buy-sell reviews can lead to new life insurance sales § Buy-sell funding § Key person insurance (Owners and key employees) § Executive benefit sales – Personal life insurance for owners – Personal or business-owned life insurance for key employees For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Every owner will leave the business someday Advance planning can make the transition easier! For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
Thank you! For agent use only. Not for public distribution. © 2015 Voya Services Company. All rights reserved. CN 0515 -14314 -0617 172620 -06102015
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