Disability insurance is an important aspect to consider when creating a buy-sell agreement for your aesthetics practice. You may wonder—-why?
In the event you as a business owner and revenue producer become disabled, a buy-sell agreement ensures that your share of the business is sold to the remaining owners or to a third party, rather than being left in shambles. This can provide peace of mind for you and ensure that your business continues to operate smoothly. Further, as a business owner, having these risk management strategies in place can also bring about assurance to your team and other stakeholders in the business, as long as you communicate this.
There are a few different types of disability insurance that can be used in a buy-sell agreement. One type is called "cross-purchase" disability insurance, where each owner of the business purchases a policy on the other owners. This type of insurance can be beneficial because it ensures that the remaining owners have the funds necessary to purchase the disabled owner's share of the business. Depending on the carrier these typically pay out in a lump sum.
Another type of disability insurance is called "entity purchase" disability insurance, where the business itself purchases a policy on the owners. This type of insurance can be beneficial because it ensures that the business has the funds necessary to purchase the disabled owner's share of the business, rather than relying on the remaining owners to come up with the funds.
Both types of disability insurance have their own advantages and disadvantages. It's important to carefully consider which type of insurance is the best fit for your med spa, and consult with a professional insurance agent or attorney.
In conclusion, Disability insurance is an important aspect to consider when creating a buy-sell agreement for your medical aesthetics practice. It can provide peace of mind for all parties involved and ensure that your business continues to operate smoothly in the event of a disability. if you would like more information about this, do contact us at Tracey Donavan.