[D097]

disability buy-out insurance

If a partner or officer/shareholder of a business becomes permanently disabled, the other owners may want to buy out that partner's or shareholder's interest in the business. A contract is formed between the owners and funded by a disability policy that will pay if one of the owners becomes permanently disabled for more than six months, one year, two years, etc. The payment is usually in the form of one lump sum or a series of large payments.