Downsizing Dilemmas
As corporate takeovers, mergers and acquisitions continue to be regular occurrences in many business markets, continued employee downsizing throughout most industries is inevitable. Good employment practices as well as employer liability safeguards dictate that conscientious business owners provide a comprehensive severance package when a longstanding employee is terminated to financially assist through an almost certainly difficult transition.
Corporate severance agreements commonly include supplemental income in regularly scheduled terms of months or years, payment for unused vacation time or sick leave, stock options, retirement benefits and limited continuation of life, dental, medical, vison and disability insurances.
Employee benefits are financially imperative to most working Americans who have become economically dependent upon employer-sponsored insurances that not only serve to protect the covered employee but often cover the employee’s immediate family as well. Frequently taken for granted by those that the programs benefit, the corporate expense of maintaining such employee benefits can be a fiscal nightmare 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, vision 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 most employers and severance agreement drafters are unaware of this dilemma, they frequently open themselves to great liability risks and threat of lawsuit.
Petersen International can 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 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 be ever present in the corporate world. Contact us for more information about severance disability insurance for your business clients.