Title: What is Disability Buy-Out Insurance? - Business Benefits Group
Headings: What is Disability Buy-Out Insurance?
What is Disability Buy-Out Insurance?
How Disability Buy-Out Insurance Works
Buy-Sell Agreements
Potential Advantages
Potential Drawbacks
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Content: This period of time can be as long as a year or two. Potential Advantages
Business owners should understand the potential advantages and drawbacks of disability buy-out insurance coverage so that they receive the most benefit. The agreement can be advantageous for both the business entity and the injured or ill person. For a business, disability buy-out insurance may guard against financial loss or even bankruptcy, ensuring the continuity of operations and employment for those on staff. Owners also can be assured control of their business decisions, with the freedom to replace the injured owner with a person of their own choosing – and without any additional financial burden. Moreover, this agreement ensures owners will not be forced into business with any family members of the injured party. Meanwhile, the affected individual is afforded peace of mind about his financial needs. Since the agreement has stipulated a set price for this purchase, agreed upon by all parties, the disabled owner or partner can feel confident he/she will receive a fair market price for his share in the enterprise. Potential Drawbacks
One potential drawback is that this coverage is not always tax-deductible, whether paid by the business or individuals. Similarly, payments disbursed through the buy-out agreement are not always tax-deductible, as they are considered a capital transaction.