Severance Disability Plans


SEVERANCE AGREEMENTS present a new opportunity for insurance advisors and producers. Merger and acquisition of businesses is a common occurrence. When two businesses are enjoined a group of executives and employees are typically dismissed. After all the theory of the enjoinment is to run two businesses with one overhead and one set of personnel.

Those who are terminated are, due to strict new employment laws, provided a contract called a Severance Agreement. This agreement promises a continuation of salary for a period of time, usually six months to two years, and a continuation of company paid (not provided) benefits.

When the severed employee walks out the door the group plans terminate! The severing company is obligated to pay for substitute benefits, if they can be found. If such benefits cannot be found, the surviving firm finds itself in the insurance business for it is obligated to the extent of the promised benefits. This is where “Severance Insurance” is needed, especially for life and LTD coverage.

Our form “Severance Agreement Statement” provides the road map for concerned Human Resource people and business owners to arrange the necessary and the promised benefits to severed employees.

This is goodwill coverage and business development coverage. The business firm will feel a sense of relief in finding substitute benefits and likely will recognize the unique help of the broker in securing this unusual coverage. The firm may offer other insuring opportunities to the creative broker. The severed employee who has been well served remembers the broker’s name in a very favorable way to his/her new place of employment. The severing company wins, the severed employee wins and certainly the Broker wins.

Another way to riches by insuring the niches.