No Better Time for Key Person DI


Considering the current state of life in the United States, with all of us doing our best to practice social distancing and contactless commerce, many American industries are wavering under the crushing pressure of the COVID-19 pandemic. Lucky for you and I much of the way we transact day-to-day business can be done so electronically and by telephone. Our business world of life and health insurances can for the most part survive by contactless means. But in order to thrive, consumer demand must also be present.

I am certain that many of you are concerned from a financial standpoint about the state of your business now and into the near future. You are not alone. This crisis is creating havoc amongst many areas of the insurance industry. Property, travel and contingency insurance sectors are reeling from recent claims accumulation and rate increases. The industry in general is witnessing great hesitancy in prospective clientele, but where we are not seeing a slowing at this time is in disability insurance queries. The demand is ever present.

Let me pose a simple question to you to relay to your business clients. What would happen to your company if you became disabled and were unable to work for a period of time? Now I want you to really give this sincere thought and imagine the possible consequences.

If you are an independent agent or an agency owner, the probable answer is that you would have to attempt to sell your book of business or let your staff go and close-up shop. If you are an employee of a larger brokerage, your inability to personally manage your accounts could cause great financial detriment, especially in the short term, to your employers. Take a moment to realize that your clients, no matter their line of work, likely face those same potential predicaments. What happens when a key person to a business becomes disabled? The simple answer is that the business suffers and could ultimately fold.

The physical loss of a key employee or employer eventually leads to the loss of present and future business accounts, the loss of relationships with important contacts, not to mention the office workflow issues that would inevitably arise. Additionally, corporate capital would be allocated to finding a replacement employee who would then need to be trained and paid an appropriate salary. The costs of the loss of a key person due to disability can easily put a company into absolute chaos, both operationally and financially.

Now more than ever, businesses need short-term insurance solutions to minimize corporate risk against the disablement of an owner or key employee. Key person DI is the answer. Policies provide total and partial “own occupation” disability benefits, allowing for the insurance to pump vital cash payments back into the affected business.

The insurance proceeds can be used however the powers that be see fit, and although the premium payments aren’t tax-deductible, the benefits are paid tax-free. The monthly benefits are meant to force a temporary corporate renaissance to hire/train a replacement employee for the progression of the firm or to economically steady the company for an eventual buy-out.

Key person disability insurance is an integral part of corporate planning and should be every bit as important to your clientele as life insurance in minimizing business risk especially during these economically trying times. 

Petersen International has both individual and guaranteed-issue group programs available for key person DI. Call us at (800)345-8816 to get quotes and more information for your business clients. 

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