An Advisors' Guide to Excess & Surplus Disability Insurance

How to Prepare Your Business Owner Clients for the Unthinkable

Posted Wed, Feb, 9th, 2022
By Exceptional Risk Advisors

When business owners are working towards growth everyday and putting out fires, it's hard to find room for things that have yet to happen.  So, it's not surprising that most business owners are ill-prepared for unexpected events between themselves and their partners.

A majority of privately held business owners have the bulk of their wealth tied up in their businesses.  Protecting their equity from the event of a disability to either themselves or to one of their partners becomes a clear focal point as the value of their business rises.  An unexpected event, like the disability of a partner due to an accident or illness, can wreak havoc on a business and unravel years of hard work.

We partnered with Inc. Business Owners Council magazine to survey 1,400 business owners and found that only 15% are prepared if their business partners are disabled.  The use of buy-sell agreements is the most effective solution to cover both death and disability.  And the most common and simplest way to fund the agreements is through insurance.

Download Business Succession Whitepaper

In the U.S. disability markets, advisors can secure around $2 million in buy-sell disability insurance.  But when an owner's equity value exceeds that $2 million mark, there is a void that requires a specialized approach.  For these titans of business, sophisticated advisors utilize surplus lines carriers like Lloyd's of London to design buy-sell disability solutions with the capacity needed to fully fund the disability buy-out obligation should a partner become permanently disabled. 

To help illustrate, we were recently asked to insure a large commodities firm whose business was rapidly expanding.  The CEO's share value increased over 250% since the last buy-sell agreement.  Download our case study to learn how we alleviated the risk and protected the organization from a massive disability exposure. 

Download Buy-Sell Disability Case Study

At Exceptional Risk Advisors, we believe it is critical to revisit the topic of succession planning every 3-5 years, specifically as it pertains to their disability repurchase obligations as they are often overlooked.  To that end, we've developed an outreach campaign that can be easily customized and deployed by you and your firm to open the conversation and begin the planning process or revisit the client's current plan to make sure it's up to date and properly funded. We invite you to download the marketing kit below:

Download the Business Succession Planning Marketing Kit  

Schedule a meeting with our business development team here.