DISABILITY INSURANCE: KEYMAN COVERAGE

If you became disabled due to a sickness or injury and cannot work in any capability, would you be able to meet your business obligations?

If not, you need reducing term disability insurance, which eases the financial burden during disability to prevent loss of business and personal assets. Reducing term disability insurance protects against the risk of total disability and is designed to fund financial obligations requiring periodic payments such as salary contract guarantees, funding of loans, and purchase agreements. Total disability is defined by the insurance industry as the inability to perform all the substantial and material duties of your occupation or profession including the inability to work at any occupation or profession.

It is comparable to decreasing term life insurance where the total coverage diminishes over time. However, while the face amount of a decreasing term life policy diminishes, the reducing term disability benefit will always be the full amount of monthly indemnity. Only the number of months payable will be reduced. For example, if you are disabled, a reducing term policy for $1,000 monthly indemnity will pay $1,000 per month until the term end or you recover. Or if you were funding a loan obligation, the policy would insure up to 100% of the monthly payment amount (principal and interest) where the obligation rested with a single principal. If the policy covered employment and performance contract, the benefits would be provided on a tax exempt basis and paid out on a tax deductible basis. Up to 100% of the net after tax cost of the contract payments could be insured. The maximum monthly benefit is usually $1,000.00.

The policy term, which ranges from 5-30 years, is equal to or less than the term of the obligations. The policy does not cover loss from intentionally self-inflicted injuries, or from normal, uncomplicated pregnancy.

For more information on how you can obtain keyman coverage, contact us.