Buy-Sell Disability Insurance

Starting a business is always risky, but business partners can increase the odds of success by anticipating problems and ironing out a plan ahead of time. For example, what will the business partners do if one of them can no longer participate in the business because of a disability? A disability buy-sell agreement funded by buy-sell disability insurance provides a practical solution for this common problem.

Why Business Partners Need a Disability Buy-Sell Agreement

Business partners should trust each other. Otherwise, they’re probably better off not starting a business together. However, the fact that they trust each other does not guarantee that they’ll never face problems or disagreements. Situations change, and planning ahead of time for possible issues just makes sense.

For example, maybe you and your business partner plan to run the business together for around thirty years, at which time you’ll both be ready for retirement and looking to sell. You’re on the same page, and everything is going great – until you’re diagnosed with cancer. You’re pretty sure you can beat it, but between the illness and the treatment, you don’t have the energy or time to run a business. Treatment is also expensive. You need to sell your stake in the business, and you need to do it now.

Your partner wants to buy you out, but he doesn’t have the cash to do so, and he doesn’t want to have to sell his property or investments to raise funds. He’s not comfortable taking out a loan, either. You could look for someone else to buy your stake in the business, but you’ll have to find someone quickly, and your partner might not like the person you pick. Your partner could sell his stake, too, but he’s put his heart into the company, and he isn’t ready to say goodbye to it yet. You explore every option, but there just aren’t any good solutions.

This is the type of situation that a disability buy-sell agreement can help avoid.