CRITICAL ILLNESS FOR BUSINESSES

In the next blog, I will discuss the “Split Dollar” Concept which can be very interesting for successful corporations. Today, however, let’s begin with the core issue. If one of the owners of a company (or one of the key employees) suffers a stroke, a heart attack, or is diagnosed with cancer, would this impact the company in any way?  Just imagine if the person most responsible for developing new clients, or the key IT person, or any key employee the company depends on for that matter were to suffer a major illness! The impact would be twofold: both on the individual and on the company. Throughout these blogs, we have explored the issues involved at the individual level, so I am going to concentrate on the effects involved at the corporate level.

One comment I MUST make is the following: if an owner states that HIS/HER illness will have little or no effect on the company that is almost a GUARANTEE that there is an employee (maybe even more than one) on whom the company depends. THAT person should be protected because his/her illness could mean disaster.

Remember that a severe illness almost never happens at the best possible time. In fact, they tend to happen at the worst possible time. I remember a company who had signed an agreement with Quebec to work on a major project – the James Bay Hydro project. It was a marvelous opportunity for all parties involved. There was no question of Quebec’s commitment to the project and they were certainly prepared to spend a significant amount of money on it. The company’s agreement was exclusive. It could well have been an opportunity to literally “print money” for the owners of the company EXCEPT that one of the owners suffered a major illness in the early stages of the contract. The opportunity to “print money” turned into a bankruptcy. Imagine if that company had had $250,000 or even $100,000 to spend on finding a replacement. Do you think any of the owners would have begrudged the cost of the coverage? Remember that it would have probably saved them from bankruptcy AND allowed them to “print the money”!

It can be very difficult to retain valuable employees. It is certainly expensive to replace them; there are initial recruiting and training costs involved and then a period of adjustment until they feel comfortable enough in their new tasks to fully take over where their former colleague left off. Have you ever overheard employees discussing how one of their colleagues or a family member has been diagnosed with cancer? It is not a pleasant conversation. Imagine now how the impact would be lessened and how their opinion of and loyalty to their employer would be affected if they knew that a check for $50,000 or $25,000 or $10,000 (tax free) would be forthcoming because of a plan you, as the employer, established?   This is a low (and tax deductible) cost with HUGE benefits to both the employer and the employee. Imagine the stress that would be relieved. Money does NOT make people well, but it sure does allow you to concentrate on getting well instead of on how the bills will be paid.

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Long Term Care Insurance
Disability Insurance
Critical Illness Insurance
Life Insurance
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