Upload
others
View
2
Download
0
Embed Size (px)
Citation preview
Nationwide® Buy/Sell Insurance
Will your business wither or bloom without you?
You know what it takes to run a successful company. After all, you own one yourself. But what would happen to your business if something happened to you? Better yet, what would happen to your family and employees?
Having the proper plan in place could save your company from disruption — or worse — if you are unable to continue managing it.
A buy/sell agreement using life insurance from Nationwide® may be just what you need.
As your personal situations change (i.e., marriage, birth of a child or job promotion), so will your life insurance needs. Care should be taken to ensure these strategies and products are suitable for your long-term life insurance needs. You should weigh your objectives, time horizon and risk tolerance as well as any associated costs before investing. Also, be aware that market volatility can lead to the possibility of the need for additional premium in your policy. Variable life insurance has fees and charges associated with it that include costs of insurance that vary with such characteristics of the insured as sex, health and age, underlying fund charges and expenses, and additional charges for riders that customize a policy to fit your individual needs.
• Not a deposit • Not FDIC or NCUSIF insured • Not guaranteed by the institution • Not insured by any federal government agency • May lose value
Add life to your business
Preparing for the future with a buy/sell agreement
When Beth and Abby opened their flower shop, Blooming Sensation, 10 years ago, no one could
have anticipated the huge success they would have.
Both in their early twenties at the time, they were single and independent. With only themselves
to consider, future planning was a low priority. Now, both married with children, they have a few
more responsibilities — including their 15 full-time employees who count on them for a living.
One day, Beth made a joke about the shop being in trouble if anything ever happened to Abby.
This really made Abby think. What would become of the business they had worked so hard to
build if either one of them were no longer around to manage it?
The flower shop wouldn’t be the only thing to suffer. Even though both of their husbands make
good livings, without the income from the shop, it would be hard for them to maintain the
lifestyle they’ve grown accustomed to.
Abby knows they would both be interested in purchasing the other half of the business, if
something were to happen or if the other ever decided to sell. But coming up with the capital
might be a struggle for both of them.
With a new sense of concern, Beth and Abby call their investment professional, John. After
they explain their goals to John, he suggests a cross-purchase buy/sell agreement from
Nationwide®. This type of arrangement uses life insurance to protect small businesses and the
families of their owners.
In Beth and Abby’s case, it would allow each of them to purchase enough life insurance on the
other to buy the flower shop from their estate in the event of an untimely death. The price of the
flower shop would be predetermined, so they can be assured their families will receive a fair price.
An added bonus of this arrangement is it can be structured to allow the policy’s potential cash
value to be used by either one to buy the company from the other if one of them decides to retire.
With a buy/sell agreement from Nationwide, Beth and Abby may be able to relax knowing their
planning has helped to address their most significant worries.
All of the above characters are fictitious, meant to represent typical individuals in typical business situations. The information above is designed to demonstrate one possible solution to a complex problem. You should work carefully with your investment professional to determine the solution that best meets your specific needs and objectives.
Summary
The death or long-term disability of a small business owner, like you, may lead to internal turmoil,
customer erosion and disruption in revenue flow. A buy/sell agreement funded with Nationwide
life insurance can help prevent these problems from arising, potentially damaging your business.
Benefits to you and your family• Promoteanequitableandorderlytransferofwealth
• Mayoffercapitalgainstaxandestatetaxadvantages
Benefits to your business partners• Willallowthemtobuycompanysharestheymaynothavebeenabletoaffordotherwise
within the existing ownership group
Benefits to your employees• Canhelpcontinuityofthebusinessintheeventofanowner’sdeath
Here’s moreBased on the funding method and the terms of your buy/sell agreement, you can:
• Guaranteethedeceasedowner’sheirsabuyerforanassettheymayhavenointerestorexperience in managing
• Provideincometax-freecashforbeneficiariestohelppayestatedebts,expenses and taxes
• Assuretheremainingownersthedeceased’sshareofthebusinesswillnotpassto someone unsuitable
• Assistinthecontinuityforcustomers,creditorsandsuppliersofthebusiness
As situations change, so will the corporation’s business and life insurance needs. Care should be taken to ensure these strategies and products are suitable for the corporation’s and the employees’ long-term goals. You should weigh your objectives, time horizon and risk tolerance as well as any associated costs before investing. Also, be aware that market volatility can lead to the possibility of the need for additional premium in your policy. Variable life insurance has fees and charges associated with it that include costs of insurance that vary with such characteristics of the insured as sex, health and age, underlying fund charges and expenses, and additional charges for riders that customize a policy to fit your individual needs.
Call your investment professional today if you think a buy/sell agreement can benefit your business.
A couple of things you should keep in mind:
• Thisstrategydoesnotguaranteereturnsorinsulateyoufromlosses,includinglossofprincipal
• Asyourpersonalsituationschange(e.g.,marriage,birthofachildorjobpromotion),sowillyourlifeinsurance needs; care should be taken to ensure that this strategy and product are suitable for your long-term life insurance needs
• Youshouldweighyourobjectives,timehorizonandrisktoleranceaswellasanyassociatedcostsbefore investing
• Marketvolatilitycanleadtothepossibilityofneedingadditionalpremiuminyourpolicytoensureitdoes not lapse
• Variablelifeproductsallowthepolicyholdertochooseanappropriateamountoflifeinsurancethathas an additional cost associated with it
• Loansandpartialwithdrawalswillreducethedeathbenefitspayabletoyourbeneficiaries,andwithdrawals above the available free amount will incur surrender charges
• Deathbenefitsandguaranteesaresubjecttotheclaims-payingabilityofNationwideLifeInsuranceCompanyandNationwideLifeandAnnuityInsuranceCompany
• Nationwideanditsrepresentativesdonotgivelegalortaxadvice;youshouldcontactyourlegalortaxadvisorforanswerstospecificquestions
• Variable life insurance has fees and charges associated with it that include costs of insurance that vary with such characteristics of the insured such as sex, health and age, underlying fund charges and expenses.
Variable products are sold by prospectus. Carefully consider the investment objectives, risks, charges and expenses that may apply before investing. The prospectus contains this and other important information about the investment company. To request a copy, contact your investment professional or write to Nationwide Life Insurance Company, P.O. Box 182150, Columbus, OH 43218-2150. Please read the product and underlying fund prospectuses carefully before investing.
Buy/Sell Plans
DuringLifetime
Buy/Sell Agreement
BusinessNot a party to the agreement
Owner B personally pays premium on policy
insuring Owner A
Each owner/member obtains life insurance on the other
UponDeath
Insurance Company
Owner A personally pays premium on policy insuring
Owner B
Family or Estate of Owner A
Buy/Sell AgreementUponDeathof
Owner AOwner B
BusinessNot a party to the agreement
StockStock
Cash
Entity Redemption
Owner BOwner A
Businessis a party to the agreementand owns life insurance on
both owners
Stock of Owner B
Buy/Sell Agreement
Stock of Owner A
Buy/Sell Agreement
Family or Estate of Owner B
ThisexampledemonstrateswhathappensintheeventofOwnerA’sdeath.IfOwnerBdies,thesamesequenceof events would take place, revolving around his or her family and estate.
Cross-purchase
UponDeathoratRetirement
All individuals selling this product must be licensed insurance agents and registered representatives.
LifeinsuranceisunderwrittenbyNationwideLifeInsuranceCompany,Columbus,Ohio,amemberofNationwide Financial. The general distributor is Nationwide Investment Services Corporation, member FINRA.InMichiganonly:NationwideInvestmentSvcs.Corporation.
Nationwide,theNationwideframemarkandOnYourSideareservicemarksofNationwideMutualInsurance Company.
© 2005 – 2011 Nationwide Financial Services, Inc. All rights reserved.
NFM-2838AO.5(09/11)