Critical Illness Insurance: Preparing To Bridge The Gap
Consider This
Having health insurance doesn’t buffer consumers against financial hardship.
Having health insurance doesn’t buffer consumers against financial hardship.
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.
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.
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.
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.
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.
An illness or injury that keeps your client from working can quickly impact other assets such as savings and retirement funds.
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.
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.
Without this insurance, a disabled owner’s share of the business could become a burden, leading to potential disputes and financial instability.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.