When an individual is invited to become a partner in a professional practice or business, there is usually a period of time that involves the Buy-In.
During this period the deal is riding on the fact that the individual becoming a partner has the finances to buy into the company. A disability could really throw a wrench in the plan.
Should the potential partner become disabled during the buy in period, there could be significant problems with the completion of the deal.
Without the ability to continue working, the disabled might not be able to afford to buy into a company.
Unfortunately, because the disabled is not a full partner at the company, a traditional Buy-Sell Disability Insurance plan will not cover him or her. In this type of situation one of our carriers’ high limit Disability Insurance policies would cover the buy- in agreement.
For example, a client owns a successful manufacturing business. He would like to sell his business to his son who has been working at the company for 15 years. He will buy 10% of the business each year for the next 10 years just by reducing his salary 25%.
If the son was to become disabled he wouldn’t be able to make his 10% commitment to purchasing the business. A disability benefit could supplement his salary in the case he was disabled and couldn’t earn his income.
It also gives the father peace of mind, which his son will have adequate funds to buy his business from him based on the payment plan they agreed upon.
Buy-In Disability Insurance reassures both parties that the partnership will be completed and that the financial obligations stated in the contract will be fulfilled.
Please contact your Disability Marketing Manager today to learn more about planning for the adequate amount of Disability benefits for your client today.