We all know people who have had cancer, a heart attack or a stroke. In fact, every 19 seconds, someone in the U.S. is diagnosed with cancer. Every 25 seconds, someone suffers a coronary event. Every 40 seconds, someone in the U.S. suffers a stroke.*

I have found that when it “hits home” for people is when it has happened to someone they love. So I’m upfront and direct about the seriousness of not having this protection. I explain to clients who are business owners: Are you prepared for how one of these illnesses might impact not only your future personal plans, but your future business plans? Whatever their answer may be, my main concern is to serve them by helping them get this protection. In doing so, I’ve done my job in bringing it to their attention and offering to help with this type of planning. Of course, the bottom line is that not many of us can afford to say, “It won’t happen to me.”

It is impossible to predict how we might react if diagnosed with a life-threatening condition. Some may choose to return to normalcy as soon as possible, while others may make drastic changes to life and work routines. Others, because of their medical circumstances, have no choice. Critical illness insurance, a specified disease policy that provides a lump-sum benefit amount upon diagnosis of certain medical conditions (as defined by the policy), benefits different individuals in different ways. The proceeds from a critical illness policy can provide needed funds for those wanting to change their lifestyles and financial security for those whose medical conditions prevent them from having much choice.

Have you ever thought about how you would pay your mortgage if you couldn’t work because of an illness?

Following are some business applications where critical illness insurance can help.

Critical Illness and Buy-Sell Planning

With buy-sell planning in the life insurance context, business owners enter into a legal agreement requiring the purchase of their ownership interest upon their death. The most common structures for these agreements are the entity purchase (the business buys the interest) and the cross purchase (the co-owners buy the interest). In these scenarios, life insurance proceeds are used to effectuate the agreement.

Firms also can set up an agreement that is triggered and funded upon the diagnosis of a critical illness. Which type of plan – the entity or cross purchase – is better for a critical illness buy-sell agreement? The answer: It depends.

A cross-purchase agreement using critical illness insurance has the same benefits as the cross-purchase agreement that uses life insurance. The remaining owners have the funds to purchase the shares without incurring precarious debt. Also, they receive an increase in basis equal to the amount they pay for the shares. All of the owners have the security of knowing that, should they be the one to incur a critical illness, they won’t have to accept installment payments or worry that the business will collapse before the purchase price is paid.

An entity-purchase agreement may be the solution if flexibility is the primary concern. With this option, the proceeds would be paid directly to the corporation. The shareholders can agree in advance under which circumstances the critically ill shareholder could or must be bought out. Further, they may also wish to include a “waiting period” to allow the critically ill shareholder the time to decide whether he or she wishes to remain in the business postdiagnosis.

The key to using this strategy effectively is to plan in advance who is to decide whether and when the purchase will be carried out.

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On a day-to-day basis, I help individuals and their families plan financially for a better tomorrow–from top-tier life insurance and income (disability) protection, to long term care (LTC) coverage and 401(k) planning. They expect and deserve the human touch.

However, many of my valued, existing clientele do not actually realize that I serve entrepreneurial companies and small employer groups (2-15 employees), as well with the same level of personal attention. Businesses are made up of people, so why would the level of service a group gets be any different than that of an individual? As a part of Guardian’s BRC (Business Resource Center), I work with closely-held businesses on a wide-range of financial programs that are geared toward the specific needs of the small business owner—from Buy-Sell Agreements and Key Person Coverage to 401k Programs. But like my own family businesses, most companies are looking to save money wherever they can. And yes, while there is an excellent chance we can get a group a lower rate for their state-mandated TDI coverage, for example, Guardian truly offers a whole heck of a lot more. We presently serve many of Hawaii’s larger employer groups (100+ employees). In fact, on a national level, over 1,400 large group customers are teaming up with Guardian. We provide individualized solutions and exceptional service. From Angie’s List to the San Diego Zoo, our large market customers look to us to be their hands-on provider. We offer:

• A full range of flexible products. Voluntary products. Employer-paid products. With a variety of flexible funding options. Plus, Administrative Services Only (ASO).
• Personal service and support — with a dedicated account representative.
• Seamless implementation. Your implementation manager and team will get you up and running quickly, with no hassles or disruption.