Disability
Long Term Disability Income
Business Overhead Expense
Key Person & Buy-Sell Disability
Critical Illness
Disability Income
This policy replaces a person's most valuable asset, their income, when they area disabled and unable to work. Usually up to 60% of a person's taxable income can be purchased. The benefit is paid monthly after a waiting period and can continue as long as to age 67 depending on the age and occupation of the insured. The target market is people under age 60 that have stable work in the private sector since government employed workers are usually already covered on the job. Professionals such as doctors, attorneys and CPAs are outstanding candidates, but don't forget grey and even blue collar workers, particularly those that own their own established business because they often do not pay into workman's comp or SDI for themselves.
BOE
While the insured, usually the business owner is disabled, this policy pays the business' ongoing bills so that there is a business to return to when the disability ends. It covers expenses like rent, interest payments, utilities, salaries, office equipment leases and maintenance, both payroll and property taxes, professional membership dues, accounting fees and insurance premiums. In some cases, BOE policies also cover the salary on any temps hired to do the job of the disabled person. Typically they do not cover income taxes or the cost of inventory.
The benefit period is short-term, from 12 to 24 months. If the business owner cannot return in that time frame, it will have helped facilitate a more favorable sale of the business and/or help account holders, clients, or customers transition to another business, practice or firm.
Key Person / Buy-Sell DI
Key person disability insurance provides funds for the business should a vital employee or owner suffer a disability and be unable to work. The funds can then be used to cover financial losses that are likely to occur due to the missing employee or it may be used to help pay for a temporary while the insured person recovers from the disability or for a permanent employee if the insured can never return to work.
This insurance can be purchased for one or more people in a business. The policy will pay according to its terms until the disabled person can return to work or is permanently replaced. Key person insurance is a short-term coverage and most policies offer a benefit period of 12 to 24 months.
Buy-Sell DI coverage provides cash for another owner to purchase the disabled insured’s share of the business. It can also be used to ‘buy-out’ a key person who becomes permanently unable contribute to the business. This policy does not replace income; it protects the business. The benefits of this policy are twofold: 1) the disabled person receives his value of the business and 2) the business remains intact and fiscally stable.
This type of policy is for small businesses with partners, several owners, or a key person upon whom the company relies on to keep it going. It is often coupled with an individual disability policy to replace income, as well. Disability buy-out plans should be included in every business buy-sell agreement along with the usual life insurance that goes with such an agreement.
Critical Illness
CI insurance pays an income-tax free benefit when the diagnosis of a covered ailment is verified by the patient’s doctor. Typically, a policy's benefit can range from $10,000 to $500,000. It is an indemnity (cash) plan of coverage that does not require justification of treatment or the actual cost of care. It can be used by the patient in any way that he or she wants.
The policy is purchased as a term plan with a guaranteed level premium. A prospect can only qualify if they have never had any of the covered illnesses or conditions indicated in the plan. So, it’s important to explain this solution to younger and/or healthy individuals who have a family history of one or more of the covered diseases or conditions so that they can qualify for coverage before it happens to them.