A Key Person Failure to Survive Case Study

Petersen International’s Failure to Survive product provides a simplified-issue death benefit on a term chassis to customers who need coverage quickly or who are not eligible or the right fit for traditional term insurance.  Typical uses of the insurance are for third-party key person situations, to indemnify buy/sell agreements and other business contracts, divorce decrees as well as satisfying lender requirements for business loans.  To provide further insight and understanding of the product, here is a key person Failure to Survive case study:

Private equity was being raised for investment into a startup pharmaceutical technology company.  The investors were seeking $10,000,000 of insurance on the life of the 57-year-old business founder and patent holder.

The group’s advisor sought out life insurance solutions through several prominent domestic outlets, but after weeks of frustrating communications with the various carriers’ financial underwriters, the advisor was ultimately met with underwriting roadblocks and declinations of coverage.

Reasons for the declines stemmed from the startup nature of the client’s business and the lack of supporting financial documentation that is typically available to longer established businesses.

From a financial underwriting perspective, this was a tough case without a substantial risk comfort level. The advisor received a referral to reach out to Petersen International with the inquiry.

After working closely with the advisor to gather as much financial information about the startup business venture as was possible at the time, including business plans and anticipated market projections, Petersen International’s underwriters were able to gain and maintain a sufficient comfort level with the risk, finally making the case viable and insurance available.

We were able to provide the client with a Failure to Survive simplified-issue term policy covering the entire $10,000,000 need.  The policy was issued in less than a week, allowing the investment schedule to proceed and the fledgling, but promising business to flourish. Don’t let insurance company declinations or underwriting timetables stand in the way of providing your clients with the insurances they require.  Please give us a call at (800) 345-8816 to learn more about the Failure to Survive line of products including key person coverage.