Overview of Individual Disability Buy/Sell ... - The Standard
Overview of Individual Disability Buy/Sell Funding Insurance Purpose of Disability Buy/Sell Agreements A well drafted business buy/sell agreement provides for the purchase of a business owners share of a business in the event that owner becomes totally disabled and is no longer able to work in the business. The buy/sell agreement describes the circumstances requiring a transfer of business ownership in the event of total disability or other contingencies, and includes a purchase price. 2
2/25/20 SI 2287PPT (10/19) Buy/Sell Agreements Include A list of all owners specifying their interests A firm or enforceable obligation to buy or sell A definition of the event that would trigger the obligation to buy or sell A value, in the event of death, disability or voluntary withdrawal A stated purchase price or method for calculating the purchase price 3
2/25/20 SI 2287PPT (10/19) Funding a Buy-Out Obligation Disability insurance like The Standards Business Equity ProtectorSM works with a buy/sell agreement by providing a source of funds to purchase the interest of a disabled business owner. 4 2/25/20 SI 2287PPT (10/19) Funding a Buy-Out
Obligation Funding a buy-out obligation with disability insurance serves a dual purpose: 5 It provides a source of funds for the purchase of the disabled owners interest in the business, thereby keeping control of the business closely held. It provides the disabled owner with fair compensation for his or her equity in the business.
2/25/20 SI 2287PPT (10/19) Business Equity Protector The Business Equity Protector policy can be owned by the business or by individual business owners. A valid buy/sell agreement must be in effect within one year after the Business Equity Protector policy is put in force.
Policy benefits are payable 6 On a monthly basis, or In one lump sum, or With a partial lump sum down payment followed y monthly payments 2/25/20 SI 2287PPT (10/19) Definition of Total Disability Under the Business Equity Protector policy, you are considered
totally disabled if because of your injury or sickness: You are unable to perform the substantial and material duties of your regular occupation; You do not perform any work for the business; and You are under the regular care of a physician appropriate for your injury or sickness. The physicians care requirement will be waived when The Standard receives written proof, satisfactory to The Standard, that further care would be of no benefit to you. The business includes any subsidiary or parent company of the business and any company that provides contracted services to the business. 7 2/25/20 SI 2287PPT (10/19) Regular Occupation The regular occupation is your
occupation at the time disability begins. The work you perform in your regular occupation must be the same work you do in your active full-time employment for the business entity. 8 2/25/20 SI 2287PPT (10/19) Benefit for Total Disability The amount of benefits for total disability The Standard will pay will
equal the buy-out expense. However, the benefit may not exceed your share of the true value of the business at the time of disability. Continued on next slide 9 2/25/20 SI 2287PPT (10/19) Benefit for Total Disability (contd) After age 61, the benefit payable would be multiplied by the percentages shown below: If Total
Disability Starts 10 Benefit Limit On or after your 61st birthday, but before your 62nd birthday: 80% On or after your 62nd birthday, but before your 63rd birthday: 60% On or after your 63rd birthday, but before your 64th birthday:
40% On or after your 64th birthday 20% 2/25/20 SI 2287PPT (10/19) Extended Benefit Rider 11 An Extended Benefit Rider is
issued to insureds aged 18-50. It delays the reduction of benefits described in the preceding slide until age 65 and provides reduced coverage until the policy anniversary following the insureds age 70. 2/25/20 SI 2287PPT (10/19) Types of Businesses Business Equity Protector is designed primarily for professional partnerships and corporations with five or fewer principals. Medical, dental and legal practices with as many as ten principals are also eligible. Individual consideration is given to businesses with more than
ten owners, although underwriting pre-approval is required. 12 2/25/20 SI 2287PPT (10/19) Coverage Possibilities Individuals not eligible for disability insurance coverage other than group insurance coverage are generally declined. The business must have been in existence for at least three years. Exceptions are considered on a case-by-case basis. Generally, all eligible business
owners must apply for coverage. No money should be collected on buy/sell applications. 13 2/25/20 SI 2287PPT (10/19) Coverage Possibilities 14
Participation with other disability insurance buy/sell coverage is possible if coordination of benefits is allowed by law. If participation with other coverage, the waiting periods must be the same. The Standard must be advised when there is other coverage in force. 2/25/20 SI 2287PPT (10/19) Find Out More Business Equity Protector Policy Summary, form SI 1062
Business Equity Protector Sample Policy, form SI 1060 Business Equity Protector Sample Policy (CA only), form SI 1060CA The Standards Financial Strength, form 13983 15 2/25/20 SI 2287PPT (10/19) Trust The Standard A national leader and pioneer in innovative disability insurance for individuals and businesses, The Standard has been keeping its
promises since 1906. You can count on it to do the same for you. 16 2/25/20 SI 2287PPT (10/19) The Standard is a marketing name for StanCorp Financial Group, Inc. and subsidiaries. Insurance products are offered by Standard Insurance Company of 1100 SW Sixth Avenue of Portland, Oregon, in all states except New York, where insurance products are offered by The Standard Life Insurance Company of New York of 333 Westchester Avenue, West Building, Suite 300, White Plains, New York. Product features and availability vary by state and company, and are solely the responsibility of each subsidiary. Each company is solely responsible for its own financial condition. Standard Insurance Company is licensed to solicit insurance business in all states except New York. The Standard Life Insurance Company of New York is licensed to solicit insurance business in only the state of New York.
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