Dynamic duos like Batman & Robin, Starsky & Hutch, and Bonnie & Clyde, all have one thing in common – they rely on each other to get the job done right. Your clients in business partnerships do the same – but, what would one do without the other?
Business partners must plan for the “what ifs” of the future. What if one partner passes, what if the other wants to retire – not often considered is what if a partner were to become disabled?
Buy/Sell Agreements will always address the event of death or retirement – and are crucial to include in any business owner clients’ plans. However, most do not identify what to do should a partner be too sick or hurt to function as a managing partner.
Consider the following:
- A business with three partners at the average age of 37 has a 78% chance of at least one partner becoming disabled before retirement*. Many feel the cost of Disability Buy-Out coverage is too expensive, but in reality it provides numerous advantages, security, and is remarkably affordable. Read more about the importance of including disability buy-out insurance in your client’s business continuation plans here.
- A 3-partner CPA firm with an average age of 35 and current business valuation of $1,500,000 would cost less than $500 per month to cover all 3 partners in the event one should get sick or hurt. Provide a smooth transition with guaranteed premiums to retirement age. View Principal’s plan composite for a CPA firm here.
Reach out to your business clientele and review their business succession plan and/or their buy/sell agreements. Make certain they understand the importance of addressing a potential disability in their plan.
To ensure your clients’ succession plans will cover all of their needs – contact your DI Sales Rep for guidance.
*Source: Commissioner’s Individual Disability Table A, Equally Weighted – All Occupation Classes, Unisex