When most producers and their clients think about Buy-Sell Planning for their business, they consider Life Insurance as the only vehicle needed in order to provide a source of funding for the buy-out of an owner.
It’s true that Life Insurance will provide for sufficient funding of a business continuation plan if the insured owner dies while the policy is in-force, but what happens if the partner doesn’t pass away and instead, they become injured or sick to the point where they are no longer capable of working in their normal capacity?
If you have used Disability Buy-Sell Insurance coverage as a companion to Life Insurance planning then your clients will be prepared for exactly this situation.
Including a Disability Income Policy in a Buy-Sell Arrangement Can Serve Two Main Purposes
It provides a source of funds to their business for the purchase of a disabled owner’s interest in a business while also providing compensation to a disabled owner for his or her equity in the business.
We can provide you with fact finders, valuation questionnaires and approach letters to help you to either review an existing Buy-Sell arrangement or to help you plan for the implementation of a new business continuation plan.
Once you have discussed and assessed the company’s need for including DI inside of their Buy-Sell arrangement, you can use it as a spring board to then promote Key Person Disability coverage, as well as personal DI coverage for any employees.
Recently, we were contacted by a producer looking to secure a basic Term Life policy on a business owner. In discussing the need for the coverage, we brought up the concept of including Disability Income inside of the Business Continuation Plan.
The result was an individual DI policy for the owner and we are now working on providing plans for all of the Key Executives. Prior to this case, the producer had never sold a DI policy with CPS.
If you have written Buy-Sell Insurance Policies in the past but did not include any Disability Income Protection, it is never too late to reach out to your clients and offer them a complimentary policy review to ensure that the planning is still sufficient for their business.
While reviewing the Life Insurance inside of the plan, you can discuss the need to have DI policies including in the Continuation Planning.
Helping to protect your client’s business interests in the event of an untimely injury, sickness or death will further solidify your role as their primary insurance professional and will likely lead to additional sales opportunities within the business and referrals for new client opportunities elsewhere.
Call us today for help in starting the review process or for ways to enter the business insurance marketplace.