Business Health Insurance (Disability Income Insurance)
Various forms of business disability insurance are closely related to the business uses of life insurance. Some of the more common types include:
Key-employee disability insurance When a key employee of a business becomes totally disabled, the business may suffer serious economic losses. This type of contract protects the business against the inability of the key employee to perform his regular duties and ease any economic burden that by exist if the disabled employee’s salary and other benefits continue during a period of disability
Group credit health insurance It is primarily used in debtor/creditor relationships where large amounts of funds are borrowed. These health contracts will protect a lender in the event that borrowers become disabled and cannot meet their monthly payments.
Business disability buyout policy These policies provide funds for a business to purchase the interest of a totally disabled partner or stockholder. Policies are arranged so that benefits are payable after 12, 18, or 24 months of a disability. That duration is selected to correspond to a trigger point, which is the date designated in the form buy-sell agreement at which the nondisabled person must buy out the totally disabled individual.