Which types of insurance typically fund Buy-Sell Plans?

The correct answer is that Buy-Sell Plans are typically funded by life insurance and disability insurance.

Buy-Sell Plans are agreements between partners or co-owners of a business that outline how their shares will be handled if one owner dies, becomes disabled, or leaves the business. Life insurance is essential in this context as it provides the necessary funds to buy out the deceased owner's share, ensuring that the surviving owners can maintain control of the business without financial disruption.

Disability insurance plays a crucial role as well because it provides income replacement in the event that an owner becomes disabled and cannot actively participate in the business. This ensures that there are funds available for the remaining owners to buy out the disabled owner's interest in the company. The combination of both life insurance and disability insurance protects the business's continuity by making sure that there are resources available regardless of whether the triggering event is death or disability.

This blend of life and disability insurance funding is what makes Buy-Sell Plans effective in safeguarding business interests under various contingencies.