The benefit for disabled owners is, they get the value of their businesses and the satisfaction of knowing that the companies they worked so hard to build won t be financially hurt because of their disability. Insurance companies typically use standard formulas for this. Be sure your disability buy-sell coverage includes a provision that increases the amount payable as the value of your company increases. Besides the amount of coverage, you need to address two other primary issues. One is the waiting period, which is the amount of time you must be disabled before eligibility kicks in.
Some providers offer a combination of the two.
Carriers may offer additional features, like transferability, which would allow you to transfer the contract after a change in the business situation. Some policies include a professional fee reimbursement benefit clause that provides for payment to attorneys or accountants, if necessary, at the time of the buy-sell agreement. Disability buy-sell products are generally designed for partnerships and small, closely held corporations of two to five owners. Coupled with individual disability income protection, the coverage will allow your company to remain economically viable while protecting your personal income if you or your partners ever need to cope with a major long-term disability. Inc. All rights reserved.