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Introducing A One-Way Disability Buy-Out Policy For Business Owners

The average business owner is not prepared to have a spouse or relative step into the business in the event that they were unable to work. In most cases, any business owner would prefer passing responsibilities to someone who already understands the business and will know how to keep it profitable.
 
Issue a disability buy-sell option for your sole-owner business clients called a One-Way Buy-Out.

Offers the flexibility to allow a key employee of the business to purchase Disability Buy-Out (DBO) insurance to fund a buy-sell agreement between him/her-self and the owner of the business.

The process is very similar to that of a life insurance policy that funds a buy-sell agreement. The difference is, your business owner clients have an eight times greater likelihood of becoming disabled during their working years than passing away.
 
Advantages of One-Way Disability Buy-Out Insurance:
  • The disabled business owner is protected by obligating the Key Employee purchaser to buy-out the owner’s interest
  • The Key Employee purchaser is protected by providing the opportunity and funding to purchase the disabled owner’s interest
  • Prevents the sole-owner from having to find an individual to buy the business while he/she is totally disabled
  • Provides a smooth transition of ownership
  • Benefits are tax-free (premiums are not deductible)
Contact your Disability Insurance Specialist for more information on how to properly develop a Disability Buy-Sell Agreement between the business owner and key employee.
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Why Disability Buyout Matters in Succession Planning

When business partners plan for the future, preparing for the unexpected is key.

While many understand the importance of addressing the untimely death of a partner, the financial disruption caused by long-term disability often receives less attention.

Yet, a disability-triggered buyout can be just as challenging to manage.

Imagine this scenario: A partner in a successful multi-million-dollar company becomes permanently disabled. Who takes responsibility for their stake, and what are the financial implications? This was the reality faced by three business partners in a recent case.

The Problem

Their buy-sell agreement outlined a clear path for the repurchase of equity in case of death — a $15 million payout funded through life insurance for each partner. However, the agreement also required repurchase of equity after 12 months of total disability, valued at $15 million per partner. Unlike the death scenario, there was no funding strategy in place to fulfill this requirement. This oversight left the business exposed to substantial financial risk.

Without a plan, the partners faced tough choices: take on a debt of $15 million, or scramble for alternative funding. Neither option guaranteed the smooth transition needed to protect their business.

A Proactive Solution

To address this gap, we crafted tailored buy-sell disability insurance policies for the partners. With a lump-sum benefit triggered after a 12-month waiting period, these policies ensured that the buy-sell agreement was executed seamlessly, safeguarding both the company’s financial stability and the equity interests of all parties involved. In this case, the premium for the policy amounted to $27,600 — a small price for peace of mind.

Why Act Now

Integrating disability buyout funding into a succession plan is as critical as providing life insurance. Without it, a long-term disability could jeopardize both the affected partner’s financial security and the company’s future. As demonstrated, a well-structured strategy can prevent significant disruptions, ensuring continuity and honoring all partners’ stakes.

Planning ahead removes the risk of a crisis. Take the time now to explore options for disability buyout coverage with a trusted insurance specialist. It’s an investment in stability and resilience — keys to a thriving business.

Contact your Disability Insurance Specialist for more information or assistance with a case.

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Income Protection Could Never Be More Affordable Than Right Now!

When is the best time to buy an income protection plan? Could it be when my client is at the top of their earning years? Or when they are just starting their career?
 
The answer is, right now, before any health concerns arise that would preclude them from securing this valuable coverage. Before the premium is too expenses due to older ages.
 
Young couples (ages 30 to 50) are very important prospects for income protection. Start the conversation about income protection with young couples who have bought a home or are starting a family. This is the best time to build a foundation of financial protection.
 
Individuals in this age group still have a lifetime of earning potential. Income is their most important asset. Their lifestyle and long-term financial plans depend on the ability to work and earn a living.
 
Example: A 33 year old client earning $60,000 annually will earn $3,463,811 by age 67 with a 3% annual increases. Many would agree that this is an asset worth protecting.

An illness or injury that keeps your client from working can quickly impact other assets such as savings and retirement funds.

These resources could be depleted depending on the time needed for recovery and return to work. It could take years to rebuild these assets.
 
Who to Prospect:
  • Single, fulltime wage earners
  • New home owners or just started a family
  • Primary wage earners in families
  • Your current Life Insurance Clients
  • Auto policy owners with higher limits
Solution:
  • Talk to your clients about the value of their ability to earn an income. Explain what’s at risk. Potentially a lifetime of earning should they lost that ability due to illness or injury. (whatsmyeiq.org)
  • Show how disability income insurance can pay them an income while they recover to help pay expenses and protect their other assets.
  • Let your clients know that there is never a better time than now to purchase this coverage. The premium will never be lower and typically their health will never be better while they are still young.
We have a unique quoting tool (https://cpsinsurance.assurity.com/) and client approved marketing tools to help you prospect your current clients and reach new potential clients. Contact your Disability experts to learn more about growing this part of your business.
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Three Questions That Lead You To The DI Sale

Selling Disability Insurance (DI) is a delicate process. You know your clients need the protection, but the ‘hard sell’ angle can be too aggressive. Today, we are working in an environment where a subtle approach has proven much more effective when opening the conversation about Disability Insurance.

Instead of drilling your clients with horror stories about the difficulties they will face without having a DI policy in place, ask them the right questions in order to make the DI sale.

Three Questions That Will Start The Income Protection Conversation
 
Do you have an income protection plan, if you were to get sick or hurt and couldn’t work?
 
“No,” will be the response you will most likely hear, leading you to question two. However, you will have a percentage of clients that may have an Employer funded group plan – and most employees with Group Long-Term Disability couldn’t tell you what their employer sponsored plan would pay if they went on claim. Simply suggest they send an email to their HR dept for an electronic copy of their benefit book.
 
Most group plans will pay 60% of their earnings and is fully taxable to maximum benefit. After taxes, that monthly benefit plummets to around 43% of their earnings – a substantial pay cut, and many aren’t able to sustain their standard of living at only 43%. The opportunity is to have them buy a small personal policy to bring their income up to 65 to 70%.
 
How long would you be able to make your monthly bills if you couldn’t work?
 
This is where we would use the subtle approach to start painting the picture of what it is going to look like after an illness or accident. Ask your client how long their Savings, Retirement Plan, and Credit cards would carry them. 3 months? 6 Months? 1 year?
 
And where is the money going to come from after that?
 
Wait to let them answer. You are still painting the picture. Let your client know that you have an affordable plan that would protect their income if they got sick or hurt. Simply ask if they would like to learn more about it. You will have a percentage of clients who ‘get it’ and will want to learn more, and you will have those that don’t care. And that’s okay – as long as you make the effort to provide them the protection, when they are ready to buy, they will come to you.
 
These three simple questions will paint the picture for your clients and help identify their need for an Income Protection Plan. Please contact your DI Sales Rep for support with your Income Protection Business.
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Why Business Owners Should Invest in Disability Buyout Insurance

When a business has multiple owners, Disability Buyout Insurance provides funds to buy out the disabled owner’s share of the business. This ensures that the business can continue operating smoothly without financial strain.

The Importance of Disability Buyout Insurance

Without this insurance, a disabled owner’s share of the business could become a burden, leading to potential disputes and financial instability.

Who Needs Disability Buyout Insurance?

Any business with more than one owner can benefit from Disability Buyout Insurance. Whether it’s a partnership, a corporation, or a limited liability company, having this insurance in place can safeguard the business from potential disruptions caused by a co-owner’s disability.

How Disability Buyout Insurance Works

When a co-owner becomes disabled, the Disability Buyout Insurance policy is triggered. The policy provides the necessary funds for the remaining owners to buy out the disabled owner’s share of the business. This ensures a smooth transition of ownership and allows the business to continue operating without interruption.

Choosing the Right Disability Buyout Insurance

Factors such as the value of the business, the number of owners, and the potential impact of a co-owner’s disability should be taken into account. Working with an experienced insurance advisor can help in choosing the most suitable policy.

Conclusion

Disability Buyout Insurance provides financial protection and ensures a smooth transition in the event of a co-owner’s long-term disability. By understanding the importance of this insurance and choosing the right policy, business owners can mitigate potential risks and secure the future of their business. Contact your Disability Insurance Specialist to learn more.

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New Markets To Grow Your DI Sales

The need for an income protection plan is not just for the Executive, Doctor or Attorney earning in excess of $150,000. According to the United States Census Bureau, in October 2020 the Median Household annual income in the United States was $67,521 from all occupations.
 
Average everyday working people (Middle America) are just as dependent on their income to provide for themselves and their families as anyone in those higher tax brackets.
 
Your opportunities are endless – reach out to your clients, friends, or family.
 
Ask if they have an income protection plan in place should they get sick or hurt. You can offer them an affordable plan to protect them and their family. Of the advisors I speak with every day, Life Insurance Agents, Health Insurance Agents, and P&C Brokers, 92% are not talking to their clients about income protection and how affordable it can be.
 
You can differentiate yourself as an advisor just by offering valuable coverage to your clients that no one has ever spoke to them about.
 
Here’s an example:
 
Did you know that the premium for a 40 year old Male Office Administrator for $3,400 monthly benefit is only $41.63 per month? There are affordable plans for even part time Dental Hygienist and Registered Nurses working as little as 24 hours per week.
 
Talk about opportunities, there are over 192,800 Dental Hygienist in the US earning an average annual income of $97,250* and 2.7 million Registered Nurses earning approx the same income.
 
Never let premium be the reason your client’s income is left unprotected from an injury or sickness.
 
The new affordable DI plans can fit most any budget. The premium for a 35 year old Female Dental Hygienist for $2,500 monthly benefit is only $55.52 per month. A 40 year old Male Insurance Agent can purchase $4,000 monthly benefit for $60.28 per month.
 
Your clients want to buy Income Protection, but they need someone they know and can trust to ask them about it. You are at the front-line to educate your Middle America clientele about the vital need for income protection in the event of an injury or sickness and how affordable it can be.
 
Discuss income protection insurance with all your prospects and clients, because they may not understand the risk of losing their income should an injury or an illness strike.
 
Contact your Disability Experts for Marketing Tools and Sales Ideas to help your clients.
 
*according to the Bureau of Labor Statistics
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How To Increase Your DI Sales

Full-Time Independent 1099 contractor groups are now eligible for multi-life discounts or Affinity Business Discounts.
 
Typically the employee must be part of an employer group, work full-time, and receive W-2 wages to qualify for a multi-life discount.

Now, small groups of 3-14 employees and contractors can qualify for an Affinity Business Discount without any employer sponsorship and receive only 1099 income.

Who is eligible?
 
Under the Business Affinity Discount Guidelines, eligibility is available to groups of 3 or more individuals applying at the same time who are:
 
  • Employees and/or 1099 contractors under a common employer
OR
 
  • Are members of a local professional employer organization
Each applicant must have an issue age of between 18 to 70, and Occupational class of at least 3A. The launch of the Business Affinity Discount makes now a great time for you and your clients to discuss the exceptional benefits of Disability Insurance at an even better price.
 
The following professions also represent potential sales opportunities:
  • Accountants
  • Independent Insurance agents part of an agency
  • IT Professionals
  • Real Estate Agents
  • Consulting Groups
Please contact your Disability Income Sales Rep for additional information.
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5.82% Investment Return “Equivalent” Guaranteed

Some clients may understand the need for Disability Income Insurance, but still resist purchasing because they don’t want to “lose” those premium dollars if they never use the coverage.

For many, the purpose of buying Disability Insurance (DI) is so they can sleep at night knowing if they get sick or hurt one day everything will be okay financially.

But what if nothing serious happens to your client during their working lifetime that prevents them from working? They have paid premiums to a policy for years that never was used. Having some peace of mind may have a cost, but there is a way to mitigate that cost.
 
There are income protection plans available with return of premium options that pay back the premium to your clients (income tax free).
 
This is how it works:
  • A 39-year-old male Real Estate Agent earning $110,000 qualified for an Income Protection Plan that would pay him $5,000 each month (tax free) if he got sick or hurt and could not work.
  • The premium for the coverage is $123.39 per month.
  • If he reaches age 67, his total premium paid would be $39,257.96.
  • If he adds the Return of Premium Advantage the additional cost would be $81.43 per month for a total premium of $204.82 per month.
  • At age 67 with no claims being paid, the Real Estate Agent will receive a check for a tax-free amount of $65,168.32 – which is the investment return equivalent of 5.82% guaranteed* on the additional $81.43 monthly premium.
This “money back DI” solution can be offered on a long-term or even short-term policies. One option of the return of premium rider provides a lump sum return of a specified percentage of the premium paid even before age 67 should the client decide they no longer need income protection coverage and want to cancel the policy .
 
Reach out to your clients to find out if they have been reluctant to purchase individual DI coverage because they feel they would be throwing money at a policy they will never use. Although policy premiums will be higher with the return of premium option, emphasize the “value” of being able to use the returned amount any way your client wishes – perhaps a lump sum payment on the mortgage or add to their retirement fund.
 
Contact your Disability Income Specialist with any questions or if you would like to see a proposal for yourself.
 
*The IRR will vary subject to clients age, occupation, and benefit amount.
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Secure Total Protection for Your Clients

Picture a rising star in the world of professional baseball, a young shortstop with a promising career. As his performance continues to impress, his current team is eager to sign him into a long-term contract worth over $150 million.

Although he’s not yet a free agent, one of his trusted advisors realizes the importance of proactive planning to guard against any unexpected risks that could potentially derail his future earnings.

The Challenge

In this critical moment, the advisor, alongside the player’s agent and financial advisor, faced the challenge of securing comprehensive permanent total disability insurance.

The objective was clear: protect the athlete’s future contract and ensure financial stability should a career-ending injury or illness occur.

The Solution

We crafted a tailored two-year permanent total disability insurance policy valued at $12 million. Additionally, we included an exclusive Critical Injury rider offering up to $500,000.

This policy guarantees a lump sum benefit if the player experiences a permanent total disability, while the Critical Injury Rider provides added protection with a one-time payout for select accidental injuries 24 hours a day, on or off the field.

Let’s Connect

We specialize in crafting high-value, personalized solutions for professional athletes and high-net-worth clients. Our deep industry expertise enables us to provide unparalleled protection, ensuring your clients are shielded from life’s uncertainties.

Get in touch today to learn more about how we can help protect your clients’ financial well-being with the most comprehensive coverage available.

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Opportunities In The Critical Illness Market Today

Many middle-class Americans who face cancer, heart disease or other serious illnesses also face thousands of dollars of debt. Even with Health Insurance, the additional cost for specialist care, unique treatments, and high deductibles add up quickly upon a critical illness diagnosis.

Fundraisers on crowdfunding websites like GoFundMe have become a popular way to find financial help in times of a healthcare crisis – yet only 1 in 10 campaigns meets the financial goal.

The Need Is Real
 
Think of the difference $50,000 could make for a person who has just been diagnosed with a serious illness such as cancer or heart attack. There’s never been a better time to reach out to your clients who have a family history of cancer or heart disease and offer Critical Illness (CI) Insurance.
 
We’ve taken steps to streamline the process with our Critical Illness Insurance carriers. A client can get up to $75,000 benefit with no exam or interview. Simply submit a complete online application through www.cpsinsurance.com and you will have an answer within 48 hours.
 
Higher deductibles and healthcare costs are adding stress to people’s lives and budgets. Your clients will understand the importance of Critical Illness Coverage when you mention it to them. Help them fill the financial gap at a time when they need it most.
 
Contact your dedicated CI Specialist. We will guide you through the simplified process and provide you with everything you need to add this to your product offering. Spend 30 minutes with us to become proficient at offering Critical Illness Coverage.
 
Source: Chicago Tribune, “Medical GoFundMe campaigns are a symptom of a sick health insurance system,” August 23, 2018.Source: Chicago Tribune, “Medical GoFundMe campaigns are a symptom of a sick health insurance system,” August 23, 2018.

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