Whether a company has stock to redeem or partnership interests to transfer, there's always a need to dispose of the owners' interests according to their wishes. Formal buy-sell agreements, funded with insurance, can help to ensure that businessowners' families or associates can take over the business or practice (or at least get out what they put into it) at the death, retirement, or disability of one of the principals.
Many businessowners and professionals have buy-sell agreements to assure the orderly transfer of their ownership interests at death, to protect their assets and to establish the value of ownership interests for estate tax purposes. If permanent life insurance is used to fund the agreement, policy cash values become a "sinking fund," which can be used for a lifetime buyout at retirement. Far fewer businessowner prospects have buy-sell agreements funded with disability insurance. This can be a mistake, considering the probability of businessowners suffering a disability during their working years.
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