Buy-Sell Disability and Life Insurance

If you own a small business with one or more of your colleagues, chances are that you’ve thought about how ownership might change in the future. Unfortunately, there is the possibility that an owner may become unable to work because of a premature death or disability.

Because of this possibility, many small business owners have a Buy-Sell Agreement put in place.

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Buy-Sell Agreements

Under the typical agreement, if one of the owners becomes disabled and can no longer work, the other owners or the business itself agree to buy, and the disabled owner agrees to sell, the disabled owner’s share of the business.

Similarly, if one of the owners dies prematurely, the other owners or the business agree to buy the deceased owner’s share of the business from the deceased owner’s heirs. When owners have worked so hard to build a business, it gives them peace of mind to know that their business interests will be protected for themselves and their heirs, with a value that can be agreed upon in advance.

Funding with Insurance

These arrangements are commonly funded by insurance. The business or the other owners can purchase disability and life insurance on each owner, and if that owner becomes disabled or dies, the insurance proceeds fund the purchase of that owner’s shares. At a time of difficult transition, having this coverage in place can make things much easier.

We have helped many small businesses, including many medical and law practices, obtain Buy-Sell Disability and Life insurance. We can help you with the funding of your business succession planning as well.

Information provided is a summary only. For complete terms and limitations, please refer to the applicable Certificate or Policy of Insurance. Specimen copies available upon request.