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DISABILITY INCOME BUY-OUT

Should one of the partners become permanently disabled and unable to work, Disability Income Buy Out will reimburse the working partner for buying out the disabled partner’s shares of the business. This insurance is purchased as a cross purchase. Like the life insurance, each partner owns the policy on the other. For example, if Partner A becomes disabled, Partner B buys out Partner A, and the insurance company reimburses Partner B up to the purchased benefit.

Other benefits of the policy are as follows:
Legal/Accounting Fee Benefit
You'll receive up to $3,000 for legal and accounting expenses incurred in the performance of the buy-sell agreement as a result of your Total Disability under the terms of the policy. This benefit is paid in addition to all other policy benefits and helps cover the extra expenses associated with the buy-out.

Transfer Privilege
If you end employment in the Firm, and start employment in another Firm in which you have ownership interest, you may become the insured under a new disability buy-out insurance policy, based on our current underwriting guidelines, without providing evidence of good health. This guarantees your future medical insurability even if you change businesses.

Benefit Update
This rider allows you to increase your coverage to the maximum amount you are eligible for every 3 years without providing evidence of medical insurability. Your protection grows as your business value grows!

Pay Out Options:

Wait 1 year then receive income over 5 years or as a lump sum.

Wait 2 years then receive income over 5 years or as a lump sum.

Of course the least expensive way is to wait 2 years for payments to begin and to take income over 5 years rather than all at once.

You could purchase an inexpensive individual gap policy to cover the two year wait.

Discounts:
There is often a 20% discount on the Buy Sell insurance when covering 3+ lives.

Important Note:
Until there is a buy sell in place that explains how disability is handled, you should have a Sick Pay Plan approved by the Board and dated Jan 1 that details how the owners are paid when sick, otherwise the salary isn't deductible to the firm.