Disability Of Partner Buy And Sell Insurance
What Does Disability Of Partner Buy And Sell Insurance Mean?
Also known as Disability Buy-Sell Insurance, this policy provides funds to a company if a partner or owner experiences a long-term illness or disability, enabling the other partner or owner to purchase the disabled partner’s shares. In such a scenario, the insurance company provides the necessary amount to the business partner seeking to buy out the shares of the partner affected by the disability or debilitating illness.
Insuranceopedia Explains Disability Of Partner Buy And Sell Insurance
A business partner is statistically more likely to experience a disability than to pass away before retirement. If this occurs, it can create challenges for the other partner, as the business may still be obligated to provide income to the disabled partner, even if they are no longer able to contribute due to their condition. Disability Buy-Sell Insurance can be beneficial in such situations. This type of policy provides the healthy partner with the funds needed to buy the shares of the disabled partner, eliminating the need for a bank loan that could put the business in debt. It is a win-win situation: the disabled partner receives fair compensation for their shares, while the healthy partner can make new business decisions without financial strain.
