Business Disability

Business Disability Insurance

Business owners have put in long hours to become successful. Many owners have either succession plans or ideas about selling the business at the time of their retirement. The business itself represents a valuable asset to the owner. The problem with most business DI plans is that the coverage amount may not be adequate to sufficiently address the need.

Why Your Client Should Care

Businesses can take years to build and a matter of weeks to be destroyed by a disability. A disability that strikes either the owner, business partner or one or more employees who are critical to the operation of the business will have a major impact. While a personal disability policy will help the owner or employee to pay bills at home, the business is still left vulnerable. Business DI is really about making sure the business has enough cash flow to keep the business running until new arrangements can be made or to pay off the equity of a disabled partner.

How Orion Can Make You The Hero

Orion can arm you with a variety of specialized business disability products. There are several types and uses for business disability insurance plans.

  • Higher Limits – Orion’s unique relationships with key carriers can help you find the amounts coverage that your client needs, not what the traditional insurance market is limited to offering.
  • Business Overhead Expense – A plan for the small business owner, especially a sole practitioner, to ensure the businesses expenses are met and to provide additional staff until the owner can either return or provide enough time to sell the business. BOE policies provide that critical infusion of cash to keep the business running.
  • Key Person – Some employees are so critical to the successful operation of a business that without them the business would suffer a major financial impact. Key Person coverage provides much needed payments to keep the businesses cash flow up until a replacement can be found or a sale at market prices can be concluded.
  • Buy-Sell – Businesses with multiple partners typically have a buy-sell agreement that spells out the value of each partner’s interests. Most of these agreements are "funded" by a life insurance policy in the event one of the partners dies. The life insurance can be used to buy off that partner’s shares. But most of these agreements are not funded by a disability policy. Ironically, the chance of a business partner becoming disabled is much higher than death.

Shaping Perceptions

Ask you client the following:

  • Most business owners would say that they can’t even take a few weeks off without it negatively affecting the business. If that’s the case, what would you do if a disability kept you out of work for a few months or more?
  • What is the value of this business? What types of insurance have you purchased to protect it?
  • Have you had issues securing additional key person, buy-sell or overhead coverage?
  • If your business is relationship-oriented (law, accounting, real estate, etc.) how much revenue would you lose over the course of a year if you lost a key rainmaker? How much money would you lose in two years?
  • If your business is based on intellectual property (software, technology, science, etc.), how would losing a key innovator translate into an adjustment in future revenue for the business?