The Second of The Five Ds: Disability

By: Amy Wirtz

We covered the first D-Death in our last blog. The following four articles will address disability, disaster, divorce and disagreement and their effects on a businesses. This article addresses the risks of both the family and the business with the owner who suffers from a short term or long term Disability. A Certified Exit Planning Advisor educates business owners on how to prepare the unknown and real possibility of the disabled business owner.

Disability
Imagine getting up at 6:00 am and starting your daily routine. You get dressed, get in the car and start your commute. Things are going great for your company because you secured a new contract that will make your year! As you enter the highway, the last thing you remember is the semi laying on its horn. You wake up in the hospital ten days later. You cannot form a sentence and cannot move your right leg or arm. Now what?

How has your business managed without you during the last ten days? How will your business survive this event? Do key employees know your job enough to get by? Will customers feel safe? Do you have disability insurance for yourself or your business overhead? What do your loan documents say, if anything, about your disability?

Recently, a dear friend called to tell me that her 52 year-old brother, Bill, had a stroke. This was sad in and of itself, but Bill also owns a personal injury law firm that employs four of her family members.

When she called she was concerned about so many things. Was he going to be okay physically and mentally? How long would it take for him to recover? What would happen to his business? Who would handle his upcoming trial? How would the family be able to agree to all of the decisions that needed to be made if there was no appointed leader?

As a business consultant, I had additional questions. Did he have disability insurance, long-term care insurance, and business overhead coverage? Could anyone else sign checks? Who are his go-to advisors? Does he have an advisory board that can help manage the crisis? What relationships did clients have with the other lawyers in the firm and would they stay? What were the terms on the line of equity or loans? Did the siblings that worked in the business get along?

A must on any professional team is a good insurance advisor. I am not talking about an insurance sales person, but a good advisor. One of my clients pointed out to me that a person can become insurance poor by planning for all the potential disasters. However, a good insurance advisor will look at your current plans, assess your actual and perceived risks and help determine that your current plans are actually insuring your real risks at a reasonable cost.

Bill has a good prognosis for a complete recovery. He is currently on a long term physical therapy plan and is recapturing his life. He has returned to work on a part-time basis and is expected to return to resume full-time work. He and his business were fortunate to survive during his rehabilitation period.

When was the last time you thought about the possible outcomes for your business and family if you would suffer from a prolonged illness or become disabled? The purpose of exit planning is to walk you through these questions and brain storm protection outcomes. Contact your insurance advisor now; if you do not have an insurance advisor, contact my office and we can help you find one in your area.