What does a disability buy-sell policy specify?

A disability buy-sell policy is specifically designed to outline the procedures for transferring ownership of a business in the event that an owner becomes disabled or dies. This type of policy is crucial for ensuring that the business continues to operate smoothly and that the remaining owners can buy out the disabled or deceased owner's interest in the business without unnecessary complications.

In this context, a disability buy-sell policy typically sets forth the terms and conditions under which the buyout occurs, including who is responsible for purchasing the owner’s share and at what price. This ensures that the interests of both the disabled owner and the continuing owners are protected and that the business can transfer its ownership in an organized manner.

Other answer choices, while related to business operations and ownership, do not address the specific focus of a disability buy-sell policy. For instance, financial investments and business valuation are crucial elements for understanding a business's overall health but are not the primary focus of what a disability buy-sell policy aims to achieve. Similarly, while tax implications may arise from ownership transfers, they are not outlined or specified by this type of policy. Thus, the correct choice accurately captures the essence of what a disability buy-sell policy is designed to accomplish.