Question

19 lynn and maggie each own 50% of the 100 shares of a private corporation. they implemented a buy/sell agreement, which states the terms of the buyout if one of them becomes ill or injured and is unable to work for a period of 1 year or more. the agreement provides for an immediate buyout at the fair market value of the shareholder’s interest. they both plan to fund the buy/sell agreement with a corporate - owned, disability buyout insurance policy. which of the following provisions of a disability insurance policy is in line with the buy/sell agreement? a2rvdtjwdytyefledwdycna0ngpudz09
a. a 12 - month waiting period
b. a 180 - day waiting period
c. “any occupation” definition of disability
d. a benefit period of 10 years
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Explanation:

The buy - sell agreement triggers a buyout when a shareholder is unable to work for 1 year or more. A 12 - month (1 year) waiting period in the disability insurance policy matches the time frame specified in the buy - sell agreement for the buyout to occur. A 180 - day (6 months) waiting period is shorter than 1 year, so it doesn't align. The “any occupation” definition of disability is about what constitutes disability, not the time frame for the buyout. A benefit period of 10 years is about how long benefits are paid, not the trigger time for the buyout.

Answer:

a. A 12 - month waiting period