When you start up a new business, purchase a practice, buy into a partnership or decide to expand your current business, there's one thing you'll need plenty of: money. More than likely, you'll be paying a visit to the bank to secure a sizeable loan.
As you crank up your business and start bringing in some profits, you'll be able to repay your loan bit by bit. If you were to die, your life insurance would repay the loan. But what happens if you become completely disabled and can no longer run your business? How will you repay that loan? Fortunately, there is one product that solves this complicated problem: Business Reducing Term DI.
What is Business Reducing Term DI?
Business Reducing Term DI pays a specified monthly benefit to the disabled business owner for a specified period of time, usually tied to the length of the loan. These products provide business owners with the ultimate security and peace of mind.
This coverage is somewhat similar to reducing life insurance policies that are often purchased to back mortgage loans. The beneficiaries of these products will receive fewer monthly benefits payments and a lower overall payout if the insured becomes disabled later during the policy term-which is why it's called "reducing term."
The term of these products typically ranges anywhere between 5 and 30 years, depending on the length of the loan. In some cases, the benefit payments go directly to the lender as opposed to the insured.
Business Reducing Term DI is much more affordable than personal income protection coverage. Plus, it has longer terms than conventional Business Overhead Expense insurance, which typically covers only 2 years or less. To beef up their disability coverage, many business owners buy Business Overhead Expense insurance in addition to Business Reducing Term DI.
Who needs it?
Experts say that anyone who is taking out a loan to buy, start or expand a business or professional practice could benefit from Business Reducing Term DI to maximize their disability benefit payments. Dentists and other health care providers are particularly good candidates for this coverage.
Business Reducing Term DI would also be beneficial in the following scenarios:
- When you're buying a business
- When you're expanding your business
- If you offer employee contract or contract performance guarantees
- To protect medium term loans
- To cover purchase agreements
As older baby boomers reach their retirement years, many of them are selling their stores, professional practices and other high-capital businesses to younger owners. As a result, Business Reducing Term DI is more valuable than ever. And it's really no wonder why-these valuable products provide the ultimate disability protection for business owners.
If you are launching, purchasing or expanding a business, you should discuss Business Reducing Term DI with your financial advisor. This highly flexible disability product can be used in conjunction with any personal disability insurance you may already have. Plus, it gives you peace of mind knowing that your business will be protected no matter what happens.
Give us a call if you'd like to go over this in more detail.