Disability Buy-Out Insurance (California)
Disability Buy-Out (DBO) insurance helps fund the purchase of a totally disabled business owner’s interest under a buy-sell agreement. It allows remaining owners to continue the business without:
- Using business cash flow
- Obtaining loans from financial institutions
- Selling shares of the business to get working capital
The policy is conditionally renewable to age 65 with guaranteed premiums. Rates are based on unisex/gender-neutral rates.
Policy HH673 available in California only.
- Smaller businesses with 2 to 10 owners1
- Occupations classified as 3A and above
- Businesses not owned by spouses, parents and children or owners with large age differences
- Up to $20 million business value ($10 million and up, contact underwriting)
1 2 to 8 for 2A-3A/3A-M occupation classes.
- Issue ages: 18 to 57
- Occupation classes: 5A/5A-M, 4A/4A-M, 3A/3A-M, 2A
- Must own a minimum of 5% of the business; all eligible owners must apply
- Minimum years in business: One year for service professionals and three years for other business owners
- Elimination Periods: 365, 540 or 730 days
- Benefit payout: lump sum, monthly installments of 24, 36 or 60 months or a combination
- Benefit maximum: Up to $3 million (additional guidelines apply)
- Simplified underwriting for aggregate benefit amounts up to $360,000
- Discounts: 10% Select Occupation, 20% Multi-Life1, 10% Association (in approved states)
- Riders: Benefit Update, Employment in the firm (for 5A/5A-M and 4A/4A-M occupation classes)
1 Available when three or more employees with a common employer purchase Individual Disability Insurance from the same producer. Not available on business products in Ohio.
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