Life and Disability for Your Executive Director

The greatest assets of a mission are its personnel. Arguably, one of the most important people on your staff is the Executive Director. I find it interesting that buildings and vans get excellent insurance protection, yet these are readily replaceable. However, of all the “assets” I see left uninsured, it is typically the top person, the one who leads the remainder of the staff and is usually the spokesperson for the entire organization. What about your Ex. Dir.?

Statistics tell us that approximately 20% of our population will die before the age of 65, an age when many hope to retire from their vocation. As such, there may be several Executive Directors, among the more than 300 members of the Association of Gospel Rescue Missions, who may never see a retirement from their mission.

More dramatic than the above statistic, is that the probability of a 50-year-old male being disabled at least 90 days, versus dying, is 33%. That means, there is a 3 times greater probability a 50-year-old male will suffer a long-term disability, versus dying prior to age 65. For a woman, the odds are even higher, since they normally live longer, making their odds of being disabled before age 65, also higher.
For a younger man, age 35, non-smoker, who works mostly at an office job, yet exercises and leads a healthy lifestyle, the odds of being disabled for 3+ months is 21%; a woman of the same age is 24%. Sobering statistics!

I would advise that are three risk management steps that every mission board should take in regard to their top executive. First, discuss the contingency of both the death and the disability of your Ex. Dir. Who will take his or her place? Will you promote from within or look for a replacement from without? Second, consider a Key-Person Life and/or Disability Income plan. Both are readily available and are less expensive when the person to be insured is younger. The beneficiary of both plans can be the mission, the spouse, or both. A well-designed Key-Personal Life plan can actually pay back the mission all of the premiums paid into it if the Ex. Dir. retires at a pre-determined age. This allows the mission to be reimbursed and the life plan left in-tact for the benefit of the spouse, thereafter. Third, in the event the odds work against everyone’s expectations, all contingency plans and the use of these tools should be written so that both the Board of Directors, the Ex. Dir. and his/her family knows what will happen next.

Brian H. Merriam, CPCU, ARM, AAI
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