A Solution to Severance Liabilities
As corporate takeovers, mergers and acquisitions continue to be regular occurrences in many business markets, continued employee downsizing throughout most industries is inevitable. When addressing potential employer liabilities, conscientious business owners will provide comprehensive severance packages at the moment of employee termination to help the newly unemployed through the sometimes-difficult transition.
American business severance agreements frequently include additional income in regularly scheduled terms of months or years, payment for unused vacation time or sick leave, stock options, retirement benefits as well as limited continuation of life, dental, medical and disability insurances.
Employee benefits are financially imperative to millions of Americans. Most have become economically dependent upon employer-sponsored insurances that not only serve to protect the covered employee but also financially impact the employee’s immediate family as well. Often taken for granted by those the programs benefit, the corporate expense of maintaining such employee benefits is typically fiscally straining to any company, no matter the size. But as previously mentioned, dutiful employers may extend coverage through a severance arrangement. And therein lies the problem.
Group insurance carriers require the immediate removal of a severed employee from an employer-sponsored plan with the possible offer of conversion to individual coverage. Family or individual life, dental and medical insurance policies are available from any number of insurance companies. Disability coverage is the exception. Without future employment contracts in place, traditional disability carriers will not insure an unemployed person no matter how recently that person was terminated. Since many employers are unaware of this dilemma, they frequently open themselves to great risks and threats of lawsuit.
Petersen International is able to assist employers, your business clients, in mitigating such liabilities and avoiding the unnecessary and potentially expensive need for self-insurance. The Petersen International Severance Disability Insurance Plan provides a severed employee with long-term monthly and lump sum disability benefits which can be sculpted to fit the requirements of a legal severance agreement.
It’s quite uncomfortable to contemplate loss of employment or the firing of an employee, but the need for corporate downsizing and restructuring will continue throughout this country. Contact our DI department at (800) 345-8816 for more information about severance insurance for your business clients.