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Reasons for Evaluating Disability Income Insurance

Here is a list of reasons why individuals and business owners take action when considering disability income insurance. Disability Insurance (DI) is seldom a topic a client or prospect will ask about. It is the responsibility of the Financial Advisor or Insurance Professional to be proactive with the discussion. Disability Income Insurance provides benefits primarily for loss of income and revenue!

The ability to earn and generate an income is the most valuable asset an individual may have.

For Individuals

Fill the Gaps – Group Disability Insurance provides a foundational layer of protection. Individual Disability Insurance can be wrapped around Group Long Term Disability (LTD) to cover holes and income limitations. Most disability policies in the marketplace are designed to wrap around employer-based coverage. Reviewing employer- based coverage can help start the discussion of income protection planning.

Portability – Provisions in an individual DI policy allow for increases should an individual leave to a company that does not provide the same amounts of Group LTD, or in the event the company decides to reduce the current benefit amounts.

Protect Loss of Income – Residual and Recovery Benefits allow an individual to receive policy benefits in the event they are not completely disabled. Or, in the event they are recovered and continue to suffer an income loss or a change in employment agreement.

Guarantee an Earn-out – In a merger or acquisition situation, individuals are provided certain earn-outs to stay on with a new company. In many of those agreements, the individual must continue working in the new company to earn the entire earn-out.

Retirement Contributions – In addition to paying an income, Employers often are contributing to an individual’s retirement plan. In the event of an illness or injury – those payments will stop, and it will have a long-term impact on an employee’s ability to retire.

Cover a Divorce Decree – This is a topic for divorce situations where there is alimony and child support. How do we insure continued payments in the event of an illness or injury?

For Business Owners

Cover Business Expenses – Small closely held businesses run the risk of key business owners becoming ill or injured. Covering the utilities and payroll can be a concern if the rainmakers suffer an illness or injury.

Revenue Protection – What happens when your top salesperson becomes ill or injured? How do you protect your company’s revenue?

Provide a Buy-Out – In partnership agreements, an illness or injury of a business owner may keep one of them from working. What happens when someone is sick, and all the work shifts to the remaining owners?

Protect a Buy-In – Often seen with Dental Practices and Law Firms, this type of coverage protects departing owners and income purchasers.

Cover a Loan Obligation – SBA Funding Agreements typically require Life Insurance, and more often we are seeing the request to protect loan obligations in the event of an illness or injury.

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