1. Buy/Sell Funding Disability Insurance at The Standard
February 15, 2019
Buy/Sell Funding Disability Insurance at The Standard
For producer training only. Not for use with consumers.

2. Contents Importance of selling disability buy/sell insurance
February 15, 2019
Contents
Importance of selling disability buy/sell insurance
Overview of disability buy/sell insurance
Buy/Sell Agreements
The Standard’s Business Equity Protector℠
Guidelines for your consideration
Required forms and documentation
SI PPT (12/15)

3. Why selling disability buy/sell insurance is valuable to you and your customers
When you have business owner customers who share ownership in a business, as part of the owners’ business planning, you can suggest buy/sell insurance as a way to provide equity funding in the event one of them becomes disabled.
SI PPT (12/15)

4. Disability Buy/Sell Insurance
February 15, 2019
Disability Buy/Sell Insurance
Disability buy/sell insurance coverage is commonly used as a companion to life insurance to fund the transfer of ownership in the event an owner of a small, closely-held business becomes disabled, triggering a buy-out of the owner’s interest in the business.
SI PPT (12/15)

5. Disability Buy/Sell Insurance
February 15, 2019
Disability Buy/Sell Insurance
Funding a buy-out obligation with disability insurance serves dual purposes. It provides
a source of funds for the purchase of a disabled owner’s interest in a business
a disabled owner with compensation for his or her equity in the business.
SI PPT (12/15)

6. February 15, 2019
Buy/Sell Agreements
A buy/sell agreement is a written agreement between business owners, including the insured, providing for the purchase of an owner’s entire ownership interest in the event of total disability or other contingencies like death or divorce.
SI PPT (12/15)

7. Buy/Sell Agreements
The Standard requires that a buy/sell agreement is in force within one year of a buy/sell funding policy-effective date, and remain continuously in force up to the time of total disability. The Standard is not a party to this agreement.
SI PPT (12/15)

8. Buy/Sell Agreements Buy/Sell Agreements
list all owners and their interests
provide a definition of disability
state the trigger point and waiting period
create an enforceable obligation to buy or sell
state a value in the event of death, disability or voluntary withdrawal
state the purchase price or method for calculating purchase price
SI PPT (12/15)

9. The Standard’s Business Equity Protector℠

10. Business Equity Protector
Business Equity Protector is The Standard’s buy/sell disability insurance product.
It is available in all states except New York.
The following slides show the data pages that are issued with Business Equity Protector.
SI PPT (12/15)

11. Business Equity Protector Data Pages
Issue ages are 18 through 60
Available to Occupation Classes 5A through B
SI PPT (12/15)

12. Business Equity Protector Data Pages
There are three funding methods
Downpayment
Monthly
Lump Sum
SI PPT (12/15)

13. Business Equity Protector Data Pages
There are three waiting periods
365 days
540 days
730 days
SI PPT (12/15)

14. Business Equity Protector Data Pages
The Future Buy-Out Expense Option Benefit Rider is issued to insureds aged
It offers owners the opportunity to increase the buy-out policy benefits on each policy’s even anniversary year to keep pace with business needs.
SI PPT (12/15)

15. Business Equity Protector by Occupation Class
Incremental payout options of two, three and five years are available.
Please see The Protector Series Product Guide for more information.
SI PPT (12/15)

16. Business Equity Protector by Occupation Class (continued)
Occasionally, certain amounts may be unavailable or limited because of reinsurance availability. The Minimum Monthly Benefit for the Business Equity Protector is $600.
The Minimum Lump Sum is $10,000.
For Business Equity Protector the 3A occupation class includes 3P physicians and dentists. The 4A occupation class includes 4P physicians, dentists and 3P surgeons. If multiple occupation classes are noted in Occupation Class List, use the occupation class that is not listed as Protector Platinum.
SI PPT (12/15)

17. Business Equity Protector by Occupation Class (continued)
Aggregate is the maximum total buy ‑ out benefit available under the monthly benefit option or when combining lump sum and monthly benefits under the down payment option. Under the down payment option, the maximum monthly benefit available is the difference between the aggregate benefit applied for and the lump sum benefit requested, divided by the number of months in the monthly benefit period. For example, a class 5A risk applying for a 540-day waiting period with a three year benefit period applies for an aggregate benefit of $2,000,000 with a lump sum benefit of $1,100,000. The monthly benefits are $25,000 ($2,000,000 - $1,100,000 = $900,000)
SI PPT (12/15)

18. Definition of Total Disability
February 15, 2019
Definition of Total Disability
Because of the insured’s injury or sickness:
the insured is unable to perform the substantial and material duties of his or her regular occupation;
the insured does not perform any work for the business; and
the insured is under the regular care of a physician appropriate for the insured’s injury or sickness.
SI PPT (12/15)

19. When Benefits Are Payable
The benefit for total disability will become payable under the funding method shown on the data page of the policy on the later of:
the commencement date; or
the date a buy-out expense is payable to the insured as a result of the insured’s total disability. The policy must be in force on this date.
SI PPT (12/15)

20. Benefits with Business Equity Protector
Once policy benefits become payable under the monthly or down- payment funding method, The Standard will continue to pay the benefit for total disability whether or not the insured remains totally disabled if:
The policy benefit limits have not been exceeded;
The total benefit paid to the insured under the policy has not exceeded the total buy-out expense under the buy/sell agreement; and
The insured is not performing any work for the business.
SI PPT (12/15)

21. Benefits With Business Equity Protector
The amount for total disability The Standard will pay equals the buy-out expense depending on the value of the business at the time of disability. It will be payable under the funding method shown on the data page, subject to the benefit limit on the data page of the policy times the applicable percentage from the table below:
Total Disability Starts
Percentage of Benefit Limit
Prior to the insured’s 61st birthday
100%
On or after the insured’s 61st birthday, but prior to the 62nd birthday
80%
On or after the insured’s 62nd birthday, but prior to the 63rd birthday
60%
On or after the insured’s 63rd birthday, but prior to the 64th birthday
40%
On or after the insured’s 64th birthday
20%
SI PPT (12/15)

22. Business Equity Protector Data Pages
The Extended Benefit Option Rider is issued to insured aged 18 – 50.
It delays the reduction of policy benefits until age 65 and provides reduced coverage until the policy anniversary following the insured’s age 70.
SI PPT (12/15)

23. Guidelines to Consider

24. Guidelines to Consider
The Business Equity Protector policy is designed primarily for partnerships and corporations with five or fewer principals.
Individual consideration is given to businesses with more than ten owners. This is rare and underwriting pre-approval is required.
Individuals who are not eligible for disability insurance coverage, other than group insurance, are generally declined.
The business must have been in existence for at least three years. This requirement may be waived on a case by case basis.
The insured cannot own his or her policy.
Money cannot be submitted with applications to bind coverage.
SI PPT (12/15)

25. Guidelines to Consider (cont’d)
Participation with other companies is possible except where law prohibits the reduction of benefits.
Where there is participation with other coverage:
The waiting periods must be the same, and
The Standard must be advised.
Owners must own at least 10% of the business and no more than 90%.
Generally, there cannot be more than a 20-year age gap between owners.
Familial relationships between owners may impact eligibility
SI PPT (12/15)

26. Required Forms and Documentation

27. Required Forms State specific application
February 15, 2019
Required Forms
State specific application
State specific Disability Buy-Out Fact Sheet Application Supplement Form 7202
Certification of Buy/Sell Agreement Form 7204
All forms can be found at Select Find Applications & Forms.
Other forms listed in your state specific forms lists may be required at the time of underwriting
SI PPT (12/15)

28. Income Documentation
Income documentation is required with the application
Last two fiscal years’ business financial statements
Please review Understanding Income Documentation. A copy is included in each application packet.
Please contact your Managing General Agent or Securian Managing Partner if you have questions.
SI PPT (12/15)

29. February 15, 2019
Resources
The Standard’s individual disability insurance producer website at
Business Equity Protector Sample Policy, form SI 1060
Business Equity Protector California Sample Policy, form SI 1060CA
Business Equity Protector Policy Summary, form SI 1062
Understanding Income Documentation Flyer, form SI/SNY
The Protector Series℠ Reference Product Guide, 9251REF SI/SNY
SI PPT (12/15)

30. February 15, 2019