Severance Insurance for Employers
Unfortunate circumstances arise in all businesses at one time or another. And for reasons such as merger and acquisition or reorganization, an employer, at times, finds it necessary to “let go” or sever business relationships with long-term employees who have amassed employee benefits in the form of pensions and insurances. Thousands of American white-collar, gray-collar and blue-collar employees are terminated annually, most with hopes of quickly finding other work and a continuation of their current benefits for financial protection of their families.
Astute and business-wise employers will most certainly create binding severance agreements with such employees to minimize liabilities and the chances of future lawsuits surrounding terminations. However, many of these agreements boldly, yet sometimes misguidedly promise to prolong previous employee benefits throughout certain term lengths of unemployment.
Since COBRA can easily be arranged, and most private health insurance plans are usually not contingent upon employment, medical insurance is readily available to those who are recently unemployed. And benefits lost under group health plans can easily be provided to severed employees. Likewise, life insurance benefits fit nicely into severance agreements because group life policies are usually portable at the time of employment termination. The problem with the severance arrangement is disability insurance.
Most employer-paid, group disability policies are not portable during periods of unemployment. And unemployed individuals cannot attain traditional disability income insurance until they have well-established employment. What is a business owner to do when promises have been made and agreements have been signed and a significant portion of the benefits package is unavailable? Solving this dilemma is Petersen International Underwriters’ Severance Agreement Disability Insurance plan which provides coverage to mirror the disability benefits promised in an employment severance package.
Don’t allow your business clients to inadequately provide benefits that aren’t available in the mainstream disability market. The liability could be severe. Contact Petersen International to discover more about Severance Agreement Disability Insurance.