zombie and ESOP

Are You Prepared For A Zombie Apocalypse?

Recently my daughter noted that we were not at all prepared for the zombie apocalypse. Being the supportive father that I am I responded by saying “seriously, you have way too much time on your hands if you are watching the Walking Dead all day long and worrying about a zombie apocalypse.”

My inner voice was saying something entirely different. It was saying “she’s right; we would be helpless if the zombies were to attack.” Now realistically I am not concerned about the likelihood of a zombie attack but I do live in Iowa and it is tornado season. Even more concerning is the likelihood of becoming disabled at some point in my career.

More than 25% of today’s 20-year olds will become disabled before they retire1. Yet, employees believe their odds of being disabled for more than three months is only one percent.2  And once disabled, most will face a significant period of time without an income – the average group long term disability claim lasts 2.6 years3.

For business owner’s disability not only brings a loss of income, but often the need to transition their business to new owners. And unfortunately, if plans haven’t been made for the ownership transition prior to the disability it may be done at a significant discount (the worst time to sell your business is when you have to).

Disability income insurance can help protect against the loss of income. But how do you protect against the loss of company value?

Some business owners look to an Employee Stock Ownership Plan (ESOP) to prepare for business succession. These qualified retirement plans allow for the orderly transition of ownership to a retirement plan to benefit the employees. If a disability were to occur, the owner could sell his or her stock to the retirement plan trust allowing for an orderly transition.

The key is preparedness. For protection against income loss that may be disability income insurance. For business owner succession that may include an ESOP. For most other issues, you might want to check out the resources at http://www.ready.gov/. And if you are really concerned about the zombie apocalypse, the U.S. Centers for Disease Control and Prevention has a blog just for you at http://blogs.cdc.gov/publichealthmatters/2011/05/preparedness-101-zombie-apocalypse/.

In addition to blogging here, I also tweet regularly about topics of interest to ESOPs. Click to follow me on Twitter –  @jlripperger.

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1U.S. Social Security Administration, Fact Sheet, February 7, 2013
2CDA 2013 Employer Disability Survey, p.6.
3Gen Re, U.S. Individual DI Risk Management Survey 2011
 
Disability insurance has exclusions and limitations. Costs and coverage details can be obtained from your financial professional.
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t14052802lg – 6/2014