Disability income buyout insurance has a straightforward purpose. A client who has become totally disabled and cannot return to work needs income. His business partner(s) cannot continue to pay him and his replacement without significantly impairing the long term growth of the firm.
The buyout insurance benefits both sides. The disabled partner receives the funds they need to buy out their share of the enterprise. The non-disabled partner(s) can focus on what they do best without worrying about how they will raise the money to buy out the disabled owner.
The waiting period is usually one year of total disability.
The plan can be designed to be a full lump payment, equal payments over the specified benefit period (one to five years) or a mixture of a partial lump sum with the balance paid in equal installments over the benefit period.