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One Way To Manage Partnerships

Denver Disability Insurance

There is considerable planning that goes into running a Denver business. This is especially true if there is more than one partner involved in the business. It is important to have a clear understanding and agreement if something should happen to one of the owners. Buy/sell agreements among co-owners, or present and future owners, of a closely held business are intended to ensure the smooth future transition of its ownership. They provide the mechanism, and, if properly funded, the means to effect a change in control and transfer of interests.

Buy/sell disability insurance can fund the exchange of company ownership. There is also a buy/sell plus product that combines buy/sell and key personal disability combined into one policy.

Here are some of the benefits of a buy-sell agreement:

  • Provides recovery for partners and heirs
  • Tax advantages
  • Provides for transfer of ownership and wealth
  • Creates fair and market value exchange of ownership

What can be a trigger for a buy/sell agreement?

  • Death, disability, retirement, divorce, loss of license, termination, and voluntary transfer of ownership.

How is a buy/sell agreement funded?

Any buy/sell agreement requires a decision regarding the type of insurance policy to purchase. The initial choice is between term and whole life insurance. The ability to maintain life insurance throughout a shareholder’s life is important. Of course there are other methods of funding including cash, borrowing, and stock. But the most common form of funding is insurance.

All Colorado employers who own either a small or large business should consider a disability insurance policy. These disability insurance policies are instrumental to cover your business in the event of losing a productive key employee, or if you, the owner, becomes disabled to keep the businesses running as smoothly as possible.


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