Site Map:

Site Map

Adviser Updates:

Adviser Updates

Publications and Documents:

Publications and Documents


Business Succession Planning:

Business Succession Planning

Need for Succession Plan

Need for Asset or Buy/Sell Strategy

Need for Liability or Key Person Strategy

Negotiating a Succession Plan


Simple Succession Plan:

Simple Succession Plan


Complete Succession Plan:

Complete Succession Plan


Financial Needs

Insurance Funding

Retirement Funding


One Page Strategy:

One Page Strategy

Asset Needs

Liability Needs

Personal Needs

Who Pays the Premiums?

Valuing the Business

Simplifying the Valuation Issue

Equity vs. Loan Capital


One Policy Strategy:

One Policy Strategy


Dual Role of Personal Cover

Dual Role of Debt Red'n Cover

Security & Tax-Effectiveness

Cost Savings

Pre-Agreed Purchase Price

Apportionment of Premiums

Methods of Aggregation


Multiple Policy Approach:

Multiple Policy Approach

Super Fund Ownership

Tax Disadvantages

Cost Disadvantages

Other Disadvantages

Geared Premium Funding

Super Buy/Sell


One Page, Two Policy Strategy:

One Page, Two Policy Strategy


Other Issues:

Tax Deductibility

Inadequate Insurance Proceeds

Vendor Finance

Changing Needs

Future Growth of Equity

Trauma Buy/Sell Strategy


Sole Proprietors and Families:

Sole Proprietors and Families


Family Ownership

Sale Strategies

Third Party Buy/Sell Strategies

Estate Equalisation Strategies

Family Buy/Sell Strategies

Second Generation Strategies

Debt Reduction Strategies




Apportionment of Premiums


One Policy Strategy

The One Policy Strategy aggregates Cover onto One Policy.

As a result, instead of having multiple Premiums for multiple Policies, there will be one premium for the One Policy.

However, this does not mean that the Business should pay the whole Premium.

In particular, it does not mean that the Business is responsible for payment of the Life Insured's Personal Premiums.

Apportionment Between Needs

The apportionment of the Premium between the different Needs is a simple mathematical process.

The Premium payable with respect to each component of the total Sum Insured will be a part of the Premium proportionate to the part of the total Sum Insured.


For example, if the Personal Cover is 50% of the total Sum Insured, the Personal Premium will be 50% of the total Premium.


Recommended Apportionment Between Parties

It is recommended that the total Premium cost of the Policies be split in the following manner:

  • the Business pays the total of the Premiums with respect to the Liability Needs of the different Lives Insured;

  • the Proprietors pay the total of the Premiums with respect to the Asset Needs of the different Lives Insured in proportion to their equity in the Business; and

  • each Life Insured pay the Premium with respect to their own Personal Cover.

In cases where a Superannuation Fund is the Legal Owner, Beneficial Owner or Recipient of any of the Cover, it will be responsible for its proportionate share of the Premium otherwise payable by the Life Insured.


Complete Succession Plan

Click here to see a summary of the apportionment and deductibility of the Premiums payable with respect to a Complete Succession Plan.


One Page, Two Policy Strategy

If the Business is concerned about the administrative burden of working out the split, the One Page, Two Policy Strategy provides two alternative strategies.

Two Policies, Same Ownership, Different Payers

The Business could split the Cover into two Policies, both of which could be owned by the Business as Trustee.

The Life Insured could be identified as the Payer of the Premium with respect to the Personal Policy, so that the Insurance Company deducted the Personal Premium from the Life Insured directly (rather than indirectly through the Business).

Two Policies, Different Ownership, Different Payers

Alternatively, if the Business required the Buy/Sell and Personal Cover to be Self-Owned, the Policy Owner and Payer could be the Life Insured.

Apportionment of Insurance Proceeds

In both cases, the Agreement would still pool the total of the Insurance Proceeds and determine how they would be split.


Copyright: Clover Law Pty Ltd



Adviser Tip

The One Policy Strategy "aggregates" Premiums that would otherwise have been separate.

When the responsibility for payment of the Premium is calculated, you can "segregate" or split the total Premium proportionately to the amount of each component of the Sum Insured.

See more Adviser Tips.


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