Not Your Dad’s Buy/Sell Disability Plan
Buy/sell disability insurance is an integral part of any sound business succession plan, providing monthly or lump sum proceeds to a business owner with the explicit intent to purchase corporate shares from a permanently disabled partner; essentially allowing a healthy owner or owners to buy-out a disabled partner’s interest in the company.
A problem that surfaces with any buy-out scenario is that the standard buy/sell insurance policies from both domestic and specialty insurers require, at minimum, a 12 month elimination period wherein the insured person must be totally disabled for at least a year before the business receives any insurance monies to help fund the eventual buy-out. That elimination period is a relatively long time for a company, which has recently lost an owner, to remain profitable when that owner may very well have been pivotal to its success.
The solution to that dilemma is the procurement of another form of disability protection – key person disability coverage with a minimal elimination period. Key person insurance provides, in the short term, much needed capital to a business in rapid transition, usually reeling structurally and monetarily from the loss of a key owner. Benefits can be used as the company sees fit, but are commonly budgeted for recruiting costs of finding a temporary or permanent replacement, reimbursement for losses due to decreased productivity and funding overtime payments for existing staff members covering additional workloads.
So proper disability financial planning dictates the need for both key person insurance as well as buy/sell insurance. That means two applications, possibly two exams and two blood draws, two lengthy underwriting periods, two premiums, two separate policies and absolutely two headaches for you and your client.
Petersen International can help you keep your clients from getting those headaches. We would like to introduce you to the Buy/Sell Plusdisability insurance program – an innovation available in the market only through Petersen. This standalone product marries key person disability benefits with a traditional disability buy/sell policy. You now have a source that can provide your corporate clients with the perfect balance of short and long term benefits, properly protecting their businesses.
The Buy/Sell Plus plan provides “own-occupation” permanent total disability benefits that are flexible, designed to fund the specific requirements of the varying terms of executive buy/sell agreements. Like other disability buy/sell products, after elimination periods of 12, 18 or 24 months, the Buy/Sell Plus pays benefits along a lump-sum or monthly-payout chassis. What sets the Buy/Sell Plus apart is the key person portion of the program which takes place on the front end of the policy.
Petersen International’s Buy/Sell Plus program provides an important key person disability benefit before the traditional buy/sell portion. The key person coverage offers short elimination period options to allow much needed capital to flood a business in transition with much-needed capital in monthly installments that mirror the elimination period of the buy/sell portion. In reality, the Buy/Sell Plus provides two comprehensive benefits platforms at one reasonable price.
One policy, two benefits, one application, one exam, one underwriting period, one price. The Buy/Sell Plus will save your clients both time and money while protecting the financial futures of the businesses they have grown and hold dear. It’s the ultimate tool in succession planning.
Call Petersen International at (800)345-8816 for a complete outline of coverage illustrating the unique benefits of this plan. If your client is in the market for buy/sell disability coverage, then they really need to consider the Buy/Sell Plus.