Are you protected against the unexpected?

Financial Protection

Key Person Insurance & Buy/Sell Agreements

Key person insurance is an important form of financial protection for a business.  In general, it can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of an important member of the business.

To put it simply, key person insurance is a standard life insurance policy that is owned and paid for by the business to cover losses from a key person who may be responsible for the majority of profits, or has a unique and hard to replace skill set, such as intellectual property that is vital to the organization, or any employee whose knowledge, work, or overall contribution is considered uniquely valuable to the company.

Key person insurance is designed to pay out a lump sum with the proceeds  being used to offset the costs incurred (such as hiring temporary help or recruiting a successor) along with replacing lost profit (due to a decreased ability to transact business until successors are trained) which the business is likely to suffer in the event of a key person  loss.

Business Overhead Expense Insurance

How  long would your business survive if you were temporarily disabled?  How would you pay the salaries of your employees and meet your monthly  expense obligations? 

Some statistics claim at least 50% of persons aged 35 will suffer a disability, lasting at least 90 days, before they attain the age of 65.

When a disability occurs, generally three things are sure to happen to a business owner:

  1. Their regular living expenses will continue to occur
  2. Business expenses will continue to occur
  3. At this most inopportune time, the income earned from the business will be severely interrupted

Business  overhead expense (BOE) insurance is designed to reimburse a business  for overhead expenses in the event a business owner becomes disabled.   This is not the same as personal disability insurance which usually pays benefits to age 65.  A business overhead expense policy pays a shorter benefit of one to two years after a waiting (elimination) period. It is generally considered that no business can stay open more than two years if the owner is disabled and the business will either be  shut down or sold.

Disability Insurance

What would happen to your business if you were paralyzed for one year? How about sustaining an eye injury for 6 months?

To the unprepared small business owner, an illness or accident resulting in disability can be devastating to your life and business. Disability insurance will replace your income in the event of an accident or illness.  You may think "it could never happen to you" but consider these hard facts:  According to the Disability Management Source Book, severe disabilities have increased 400 percent over the past 25 years for the ages between 17 to 44.  Before the age of 65, one in seven people will become disabled for five years or more.

So How much Disability Insurance Do You Need?

The important decision your small business will have to make is how much disability insurance you need and can afford. Review your assets and liabilities to determine how long you can go without income.  Assess your expenses and make the necessary adjustments for a disabled lifestyle.  In the event of a disability, you might have enough financial resources for the short term but it's more likely your business will need long term disability insurance.

Long Term Care Insurance

Long Term Care insurance helps provide for the cost of long-term care beyond  a predetermined period and covers care generally not covered by health insurance, Medicare, or Medicaid.

Long Term Care insurance generally covers home care, assisted living, adult daycare, respite care, hospice care, nursing home and Alzheimer's facilities.  If home care coverage is purchased, long term care insurance can pay for home care, often from the first day it is needed.   It will pay for a visiting or live-in caregiver, companion,  housekeeper, therapist, or private duty nurse up to seven days a week, 24 hours a day (up to the policy benefit maximum).