Over the last few blog posts, we have been discussing the concept of the “Five D’s,” five major events that can create severe disorder in a business. These are:
- Disagreement
- Divorce
- Disability
- Distress
- Death
Every business needs a contingency plan for Disability, the third D. Even the Constitution of the United States makes allowances for questions raised by presidential disability, which has happened a number of times throughout our history.
Before age 65, we are all more likely to need the benefits of disability insurance than life insurance. All owners and executives stand a reasonable chance of becoming disabled for three months or longer during their time at the helm, anywhere from 21% to 38% according to some insurance studies. Long before you or your executive team might need it, define and understand the parameters, protections and obligations of your company, your partners, your spouse and others in the event of your disability. Disability can create many problems, including questions of who will make the emergency decisions, how to keep the company running, who will make the long-term transition choices, and how to support the disabled owner and their family.
Beyond visiting with insurance advisors and financial planners to discuss disability insurance policies to shift some of the risks, you need to craft the necessary contingency plan documents to grant the proper authority to trusted individuals.
Disability insurance might be an added expense, but it’s not as expensive as losing your company and your livelihood in the event of accidents, medical issues like cancer or being the victim of violent act.