Buy-Sell Disability Insurance

A Buy-Sell agreement contains provisions for the business to buy out the principal's share of the business in the event of the principal’s disability. It safeguards the business by providing the funds necessary insurance policy on the other shareholders. The purchaser is both owner and beneficiary of the policies. Upon the death of a shareholder, the other shareholders for a disabled owner to purchase his or her share of the business, up to the terms of the contract. The funds to complete the transaction can come from several sources:

• The business,
• Another buyer, or
• An insurance policy.

Funding with insurance helps prevent draining funds from the business. Designed to fund the disability portion of a formal buy-sell agreement, this insurance will provide funds for small business partnership buy-outs in the event of total disability.