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>> David Glen: There's an old adage in life that there is only two certainties; death
and taxes.
Unfortunately, human beings give a lot of thought to taxes, and very little thought
to death. Human beings are reluctant to contemplate their own mortality.
And also, small business proprietors are too busy caught up in the day-to-day activities
of running their business to give any thought to this very important topic.
We have to understand that, at the time of death or disability, it's a time of enormous
stress on all individuals concerned.
They cannot get value for this business because they are selling this business on a fire sale
basis.
The fellow proprietors are also reluctant to pay value for the business at this time,
or to provide any finance for the transaction.
This is particularly stressful to individuals outside the business aswell. Think in terms
of customers, staff, creditors, bankers;
they are all anxiously watching the performance of the business.They feed off eachother and
this anxiousness can lead to the demise of the business.
The obvious solution is a succession plan. A succession plan is an agreed course of action
which comes into effect when there is death or disability.
For example, a succession plan can contain an agreement in terms of which the business
is transferred to the succeeding proprietors.
And this transfer is financed by way of an insurance policy on the life of the proprietors.
This enables the business to continue after the death of the proprietor by the remaining
proprietors,
and the deceased family receive value, but make a clean break from company.
The Life Insurance Adviser plays an important part as an educator and coordinator in this
process.
What the Life Insurance Adviser should do is map the flow of premiums as well as claim
proceeds in this situation, to ensure that it delivers the right outcome to the parties.
TAL provides a comprehensive range of technical support and materials to its Advisers.
It also provides telephone support to deal with structural and tax queries as the succession
plan is being drafted.
Succession planning is not rocket science. The important thing is to get the succession
plan in place on a timely basis, that is, before the death or disability.
And remember, insurance cannot replace human life, but what insurance does do is it gives
economic options to those left behind,
so they can get on with the grieving process without any economic pressures.