Category: Coverage
A buy/sell agreement is a contract between business owners that triggers a forced transfer of equity on death, total disability, or critical illness; Key Person Life, TPD, and Trauma cover is the standard funding mechanism for the buyout sum. The structure choice is cross-owned or self-owned.
The panel is AIA, Zurich, TAL, OnePath, ClearView, NEOS, Encompass, Acenda, and Futura. All 9 insurers explicitly support buy/sell as a business-event trigger for forward-underwritten increases on their Future Insurability or Business Safeguard mechanisms.
| Structure | Who owns the policy | Who receives proceeds | Pros | Cons | |---|---|---|---|---| | Cross-owned (each insures each) | Each owner owns a Life or TPD policy on each other owner | Surviving owners receive proceeds and use them to buy out the deceased estate | Clean s118-37(1)(a) CGT exemption typically applies; survivors hold buyout funds directly | Combinatorial complexity (4 owners need 12 policies); premium disparities between younger and older owners | | Self-owned (business or trust holds policies) | The business entity or an insurance trust owns all policies | Entity receives proceeds; entity then buys back the deceased's shares | Scales with owner count; consistent administration | Proceeds to non-original-owner can lose CGT exemption; trust deed needs careful drafting |
The choice between structures is a legal-and-tax decision made with the business's accountant and solicitor, not an insurance product feature. Both structures are supported by all 9 panel insurers; the policy itself is issued to whoever appears as Policy Owner on the application.
for buy/sell, share purchase or business succession business insurance purposes - a written re-evaluation of the business from a qualified accountant or valuer. Maximum $10 million Business Safeguard cap with TPD sub-caps.key person insurance, loan/guarantor protection, buy-sell/shareholder or partnership protection. Automatic-increase cap $15 million for the death benefit.the Life Insured is a partner, shareholder or unit holder in that business... and the Policy forms part of a buy-sell, share purchase or business agreement. Maximum per non-business event $1,000,000.The life insured is a partner, shareholder, unit holder or similar principal in a business and this policy supports a written 'buy/sell' share purchase or business succession agreement, and the value of the life insured's financial interest in the business increases. Evidence requires business results for the last three years. This event is not available if the life insured's Cover is under a policy held through super.If the original purpose of your cover was to support a business purpose such as a buy/sell arrangement, a share purchase agreement or a business succession agreement, and the value of that business increases.a written ownership (buy/sell), share purchase or business continuation agreement under which you're a partner, shareholder or unit holder in the business.ownership (buy sell) agreements, audited company accounts and tax returns, or such other documents or evidence as we may require. Maximum Life Cover increase three times your original insurance amount, or $15 million.If the original purpose of your cover was to support a business purpose such as a buy/sell arrangement, a share purchase agreement or a business succession agreement.The insurance is one piece of a buy/sell. The legal scaffold typically includes:
The ATO framework for buy/sell insurance is set out in:
Buy/sell cover is almost always capital purpose: premiums not deductible, proceeds generally not assessable, CGT exemption typically applies for the original beneficial owner. Cross-ownership preserves the s118-37(1)(a) exemption more cleanly than self-ownership; self-ownership requires careful trust structuring to maintain the exemption.
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