What it is
Disability buy-sell insurance policies are for small businesses with partners or several owners. This policy is often coupled with an individual disability policy. It allows a company to continue if one of the owners becomes disabled.
How to explain it
Imagine … If your business partner becomes disabled and is unable to pull his or her weight, how will you feel in six months? How will you feel in two years? How will your partner feel in two years? This kind of situation easily results in awkward personal relationships and crippling financial strain. A far smarter alternative is to have a backup plan in place — before disability strikes.
A disability buy-sell policy protects both partners while saving countless businesses and relationships. If a partner is unable to work due to injury or illness the policy will fund the buy-out of the business, according to prearranged policy terms. This is an essential coverage that helps you prepare for all the unknowns involved with business ownership.
When to offer it
Offer this coverage, in addition to individual disability insurance, whenever a business is owned by more than one person. The disability buy-sell insurance policy provides cash for another owner to purchase the disabled insured’s share of the business. This policy does not replace income, rather it protects the business. The benefits of this policy are twofold, the disabled owner receives his value of the business and the business remains intact and fiscally stable.
In addition, consider offering business owners a business overhead expense DI policy.