Keep Your Business Alive
One of the first things any business owner needs to consider is how to protect against events that may threaten the future of the business, like the death or disability of a proprietor, partner or key employee. When adversity strikes, a smart business continuation plan can help protect business partners and family members alike.
Protecting Your Business with a Buy-Sell Agreement is an agreement between owners to buy out a co-owner’s share of the business in the event of that co-owner’s retirement, disability or death. Typically Term Life Insurance is used to fund the Buy-Sell agreement in the event of the death of one of the Partners. Individual Disability Policies are used to fund the disability portion of the Buy Sell Agreement.
There is also business overhead insurance, which reimburses a business for overhead expenses if a business owner becomes disabled. This typically pays benefits for one to two years and helps cover expenses like salaries, taxes, employee benefits, rent, mortgage, utilities, and equipment.
Protecting and Retaining Key Employees
You depend on your key employees. Chances are they contributed to the success of your business. Special compensation arrangements, such as an executive bonus plan or deferred compensation plans can help your business retain its key employees by providing additional benefits above your business’ standard package.
Additionally, coverage is available to help protect your business from the unexpected death of a Key Employee. Life insurance owned by your business can help cover the cost of finding and training a replacement.
Term Life Insurance is the least expensive way to purchase a substantial death benefit, for a fixed premium over a specific period of time (such as 5, 10, 20, or 30 years) and a benefit is only paid out if the insured dies during this period. Term life insurance is the original form of life insurance[ and can be contrasted to permanent life insurance such as whole life or universal life, which guarantee coverage at fixed premiums for the lifetime of the covered individual unless the policy owner allows the policy to lapse. Because term life insurance is a pure death benefit, its primary use is to provide coverage of financial responsibilities for the insured or his or her beneficiaries. Term life insurance may be chosen in favor of permanent life insurance because term insurance is usually much less expensive
Permanent insurance, including whole life insurance and universal life insurance, has two key features. First, permanent insurance provides coverage throughout the life of the insured person. Second, permanent life insurance provides insurance combined with savings and investment components. This allows permanent life insurance policies to build a cash value that can be borrowed against to help fund future goals, such as a child’s college education.
Types of Permanent Insurance
There are two main types of permanent life insurance, Whole Life and Universal Life.
Whole Life Insurance offers permanent life insurance with a fixed annual premium. Whole life policies accumulate cash values and the death benefits gradually increase with time.
Universal Life Insurance is permanent life insurance with a flexible annual premium and flexible death benefit. In a universal policy, you generally have a minimum payment equal to the cost of term insurance, plus administrative costs. Any payments made above the minimum are credited to the cash value component of the policy.
All permanent and term life insurance requires a medical exam.
Simplified or Accelerated Approval Life Insurance
Accelerated or Simplified underwriting provides you with a streamlined approach to obtaining life insurance with the elimination of lab testing and medical exams for applicants who qualify. Qualified applicants will receive approval within 48 hours with very competitive premium rates.
Case Study #1
Male 60. $1MM Term – Approved Super Preferred Approved in 4 days with No Exam.
Case Study #2
Male 34. $500K UL 30 year Term – Approved Preferred in 48 Hours with No Exam.
Guaranteed Life Insurance
Guaranteed Issue Life Insurance requires no medical questions, exams, or tests and provides affordable, permeant protection for life and premiums will never increase. If you are between the ages of 40-80, you can automatically receive up to $40,000 in permanent, guaranteed life insurance coverage. The life insurance cannot be cancelled for any reason as long as premiums are paid. There is no medical exam; coverage is based on answers to a few health questions, Paid benefits do not decrease, Premium rates never increase, Benefits are paid to your beneficiary by an A+ carrier.
Disability Insurance, often called DI or disability income insurance, or income protection, is a form of insurance that insures the beneficiary’s earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work. Statistics show that in the US a disabling accident occurs on average once every second. In fact, nearly 18.5% of Americans are currently living with a Disability, and 1 out of every 4 persons in the US workforce will suffer a disabling injury before retirement.
TYPES OF DISABILTY INSURANCE PLANS.
Key-Person Disability Insurance
Key Person Disability Insurance provides benefits to protect a company from financial hardship that may result from the loss of a key employee due to disability. The company can use the benefits to hire a temporary employee should the disabled employee’s disability appear to be short-term. In the case of permanent disability, benefits are used to help defray costs related to hiring a replacement, including recruitment, training, startup, loss in revenue and unfunded salary continuation costs.
Business Overhead Expense Disability Insurance
Business Overhead Expense (BOE) coverage reimburses a business for overhead expenses should the owner experience a disability. Eligible benefits include: rent or mortgage payments, utilities, leasing costs, laundry/maintenance, accounting/billing and collection service fees, business insurance premiums, employee salaries, employee benefits, property tax, and other regular monthly expenses.
Individual Disability Insurance
Individuals who desire disability coverage, may purchase policies that will pay 60% of the insured’s gross monthly wages up the policy’s stated ceiling. After a specified waiting period (usually 30, 60, 90, 180, or 365 days), the policy will pay the monthly benefit tax free for as long as you remain disabled or up to the age of 65.
High-Limit Disability Insurance
High-limit disability insurance is designed to keep individual disability benefits at 65% of income regardless of income level. Coverage is typically issued supplemental to standard coverage. With high-limit disability insurance, benefits can be anywhere from an additional $2,000 to $100,000 per month. Single policy issue and participation (individual or group long-term disability) coverage has gone up to $30,000 with some companies.