3 Reasons to Include Buy-Sell Disability into Your Practice

When your clients are immersed in the daily hustle of business growth, their blinders are up and they are not thinking about unexpected events that could occur.  However, as advisors, it's our duty to carve out time for these crucial conversations, especially when it comes to funding a buy-sell obligation.  Incorporating buy-sell disability planning into your practice's business succession strategy is not just beneficial; it's a triple-win for both you and your clients.

Here are three compelling reasons why you should integrate buy-sell disability planning into your business succession planning process:

1. It's a Moral Imperative: Statistically, the likelihood of becoming disabled during one's working years is three to four times higher than the likelihood of passing away.  As conscientious advisors, it is our ethical duty to address this potential scenario.  Protecting your client's financial well-being in the face of disability is not only prudent but also the right thing to do.
2. Preparation for Business Obligations: Buy-sell agreements typically mandate the repurchase of a disabled shareholder's equity after a 12-month period of disability.  By incorporating buy-sell disability planning, you ensure that your client is well-prepared to meet this obligation, preventing potential financial hardships and disputes within the business.
3. Enhanced Commissions: In the realm of insurance, commissions for buy-sell disability insurance are notably higher compared to buy-sell term life insurance.  This presents a significant opportunity for both advisors and clients to benefit financially while securing the business's future.

In the U.S. disability insurance market, advisors can secure coverage of up to $2 million for buy-sell disability.  However, when the equity value of a business owner surpasses this threshold, it necessitates a specialized approach.  Seasoned advisors often turn to surplus lines carriers such as Lloyd's of London to craft buy-sell disability solutions with the requisite capacity to fully fund disability buy-outs should a partner become permanently disabled.

At Exceptional Risk Advisors, we emphasize the importance of revisiting the topic of succession planning every 3-5 years, with a specific focus on disability repurchase obligations, which are often overlooked.  To facilitate this, we've developed an outreach campaign that you and your firm can easily customize and deploy.  It will help initiate conversations, kickstart the planning process, or review your client's existing plan to ensure it remains current and adequately funded.

We invite you to access our Business Succession Planning Marketing Kit by clicking the link below:

Download the Business Succession Planning Marketing Kit Here

Incorporating buy-sell disability into your practice is not just a strategic move; it's a responsible and lucrative decision that benefits both you and your valued clients.