Disability Buy-Out

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Disability Buy-Out

Protecting Your Business from Disability - Your Own or Your Partner's

One of the most overlooked insurance issues for small business owners is how disability can affect your buy-out arrangement within your partnership agreement. Although most properly structured partnership agreements contain built-in or separate disability and life buy-out provisions, many are left un-funded.

What we are referring to here is that payment to fund the agreement upon the death or disability of a partner is not secured through insurance. This can have disastrous consequences for the business. Many sad examples can be found of a small business failing because of the cash drain caused by the death or disability of one business partner without the necessary insurance to fund the agreement. Always remember: the agreement may state that the disabled partner or a deceased partner's estate is entitled to the fair value for their share of the business, and rightfully so, but how will you pay them?

Think of the issue from both perspectives. The remaining working partner deserves to own 100% of the business so they can move on without undue hardship, while the disabled partner or the deceased partner's family deserves the fair value for his/her share of the business. Its' simply a smart business decision.

	Think it won't happen to you? Think again. With two business owners, both aged 35, there's a 53% chance that one will become disabled prior to age 65**.
	Properly designed insurance policies are your most effective and affordable options to properly fund a disability and life buy-sell agreement.

** Commissioner's Individual Disability Table A (Society of Actuaries)

For a complete narrative on the buy-sell agreement and funding, hit the following link for an informative article on the subject within this site.

Buy-Out Article

The Disability Buy-Out Policy from Berkshire Life Insurance Company of America, a wholly owned stock subsidiary of Guardian can provide peace of mind for your small business. Available features: (*form 3100)

	Benefit amounts up to $2,000,000 on each insured subject to business valuation formulas
	Elimination periods (waiting periods) of 12, 18 or 24 months
	Various funding methods, including Lump Sum, Down Payment/monthly payments, and level monthly payments.
	Future Purchase Option to increase benefits as your business value grows. This option is available for purchase through age 50 and is exercisable on the policy until age 55. The maximum annual option amount is $150,000.

Talk with your partner and then talk with us. Premiums can be very affordable. The most expensive alternative is to leave your agreement un-funded. It could spell the end of the business you've worked so hard to build if you or your partner becomes disabled or dies. Disability and Life Buy-Out polices are the answer to the problem

Be sure to call Dave Richards today for information and a detailed proposal. Remember, you can also request information online through our Information Request page.

* Policy Form 3100. Disability Income Insurance policies underwritten and issued by Berkshire Life Insurance Company of America, Pittsfield, MA, a wholly owned stock subsidiary of The Guardian Life Insurance Company of America, New York, NY.