Disability Insurance
Also, when purchasing insurance as an entrepreneur, buy-sell planning is an important part of any financial plan for business owners with partners. It’s usually funded with life insurance and will allow Also, when purchasing insurance as an entrepreneur, buy-sell planning is an important part of any financial plan for business owners with partners. It’s usually funded with life insurance and will allow for an orderly transition when a partner dies. However, what if an owner doesn’t die? How is the disabled owner going to be able to access their equity in the business? Here’s how the conversation is going to go. Joe and Fred are partners and Joe becomes permanently disabled. Joe says to Fred, “Hey Fred, it’s been a great 20 years we spent together but I’m not coming back so I want you to buy me out. Our business has grown to be worth $1,000,000 so my 50% share is $500,000. When can I get a check?” Fred is going to have to be thinking fast for an answer to that one! Unless, of course, their smart advisor told them to buy not only life insurance as a funding mechanism but Disability Income Buy-Sell as well. It’s part of a comprehensive plan. With this coverage in place, Joe gets his money and Fred still has an intact business to run. |