Disability coverage may be the least understood and most neglected area of business planning. Most people know that it’s important to prepare for a possible death, but rarely do they imagine that a partner or key employees will become disabled. Yet disability can be a lot more damaging to a business than death and is much more likely to happen.
Depending on when they were born, workers are about four times as likely to become disabled as they are to die before reaching normal retirement age, according to Social Security Administration projections.
Say you and I are business partners, and one day I go skiing and fly right off a cliff. Suddenly, I’m seriously injured or even permanently disabled. I’m not adequately covered by disability insurance, and neither is the business. You break the news that you can’t afford to keep me on. I still own shares but you can’t afford to buy me out. I’m out of luck, but so are you. All you can do is hope that when the time comes to make critical business decisions, I vote your way. That’s a situation business owners want to avoid, yet many are unaware of the insurance options available to them..
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