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Nate Obringer, CFP®, RICP®
Financial Planner
Prudential Advisors
9800B McKnight Road, Suite 223
Pittsburgh, PA 15237
Phone: 412-318-4129
Fax: 877-840-2322
Email: nate.obringer@prudential.com
November/December 2019
Protect Your Business
You may know about group disability income (DI) insurance because your company offers it as an employee benefit, but did you know that there is also individual disability income (DI) insurance that can help protect your business in two ways? You can use it as a way to buy out a disabled partner or to help your company financially if you lose a key employee and, consequently, productivity due to disability.
DI to Buy
Properly structured, a DI buyout agreement or DI buy-sell arrangement can provide the funds to buy out a partner or co-owner. These types of arrangements are typically for smaller businesses and they include a number of qualifications and limits.Such an arrangement would trigger a buyout in the event of a permanent disability as defined by the disability insurance policy and the agreement. The insurance policy usually includes an elimination period – the period between when the disability is identified and payments begin – of between a few months and a couple of years, with the longer periods resulting in lower premiums.
DI to Protect
Another way to financially protect your business is through key person disability insurance. As with a buy-sell agreement, a DI key-person arrangement will define what constitutes permanent disability, include an elimination period and ultimately provide the cash flow necessary to keep the business running smoothly while the key employee is replaced. A separate group DI insurance policy such as one offered to all your employees would pay the disabled employee in the event of permanent disability.Unlike a buy-sell agreement, key person DI insurance would pay benefits to the company and not the employee. The company can use benefits to recruit potential successors to the disabled employee, pay for training and compensate the company for related financial difficulties while the new employee gets up to speed.
DI for the Masses
While key person DI insurance is appropriate for smaller companies that don’t have an obvious or adequate replacement for a disabled key person, group disability income insurance can be a crucial employee benefit to attract hard-to-find talent and keep workers happy and productive. Talk to an insurance professional to learn more.1022416-00001-00
Nate Obringer is a Financial Planner with, and offers securities and investment advisory services through LPL Enterprise (LPLE), a Registered Investment Advisor, Member FINRA/SIPC, and an affiliate of LPL Financial.
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