Glossary - Insurance
Buy-out agreement - Also known as a Buy and Sell Agreement. This is a formalised and legal contact between the partners or shareholders of a business that ensures that the management and/or ownership will pass smoothly to the remaining partners/shareholders in the event of death or incapacity by one of the partners or shareholders. The aim is to prevent the business from becoming unmanageable due to disagreements or infighting resulting from death or incapacity. It will also ensure that the requirements of the deceased partner’s heirs are met.
Premium - The amount at which a product or service is valued, over-and-above its intrinsic value. This will frequently be a result of a premium brand image generated by marketing and pricing strategies. For example, a Gucci-branded handbag will sell at a premium price versus an identical handbag without the Gucci label. In investment terms, Premium refers to the amount at which a securities option is traded. In Insurance terms, a Premium is an amount paid monthly (or at another agreed interval) to ensure a policy remains active.