The same ownership-transfer problem as a death-triggered buy-sell agreement, but for disability — which uses disability rather than life insurance and often pays out over an installment period.
How it works
The total buyout value is computed the same way as this site’s buy-sell agreement calculator — ownership percentage applied to business valuation. If the payout is structured over several months rather than as a lump sum, dividing by that period gives the monthly benefit needed.
What this does not include
Disability buy-out policies typically require an elimination period (a waiting period before benefits start) and often define “disability” more strictly than other disability coverage — details this calculator’s dollar math doesn’t address.
How to use this calculator
- Enter the business valuation and this owner’s ownership share.
- Enter the payout period in months (1 for a lump sum).
Frequently asked questions
Why would a payout be spread over months instead of a lump sum?
Installment payouts can be easier for a disability insurer to underwrite and can better match the buyer’s cash flow for making buyout payments to the disabled owner.
Does this replace regular disability insurance?
No — this funds the business’s buyout obligation specifically; the disabled owner’s personal income replacement is a separate need, covered by individual disability insurance.
What triggers “disability” under these policies?
Definitions vary by insurer and policy — some require total disability, others accept a defined loss of duties — a detail specific to the policy, not computed here.
