Buy Sell Agreement Funding Insurance

Life Insurance and Total and Permanent Disability Insurance are often required to fund a buy/sell agreement. A buy/sell agreement is a contract usually entered into between business partners pursuant to which the surviving partners are bound to buy out the other partner’s interest in the business should a specific event occur. Specific events which may trigger a buy/sell agreement include death, divorce, long-term disability, retirement or bankruptcy.

The insurance policy is required to provide the surviving business partners with the money to be able to buy out the deceased/disabled/departing partner’s interest.