business disability insurance
Disability coverage may be the most neglected and least understood area of business planning, but it’s also one of the most important.
What will happen to your business if you become disabled? Will you continue to operate without loss of income or will you have to sell the business?
There are several forms of disability insurance that can be used to protect a business. the two main planning strategies are to protect the personal income of the owner as well as the income of the business.
Reading: Who would be the insured in business disability insurance
The owner must take out personal disability insurance to ensure his income in the event of an accident or illness. The business must purchase disability insurance to ensure it stays in business while the owner recovers from a disability or to transfer/sell the business to someone else.
When it comes to protecting business income, the following products should be considered in the event the owner or key employee becomes disabled:
- business general expenses
- commercial loan protection rider
- key person
- company owner/partner purchase
- executive exclusion
business general expenses
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When a business owner becomes disabled, they not only risk losing their personal income, they also risk losing business income. A business overhead policy reimburses for fixed monthly business expenses such as: rent, employee wages, utilities, insurance, and maintenance services.
commercial loan protection rider
One of the biggest expenses for a business owner is monthly loan payments. The Business Loan Protection Rider can be added to a business overhead policy to allow the owner to use the funds to pay off current and future bank loans.
key person disability
A key person disability policy protects the business owner in the event that a key employee becomes totally disabled due to illness or injury. the policy is issued for a predetermined amount; benefits are paid in a lump sum or monthly lump sum payments. benefits allow the business owner to offset costs such as hiring temporary staff, finding a replacement, hiring and loss of income during training, etc.
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Business Owner/Partner Buyout Disability Insurance
The two main triggers for a buy-sell agreement are death and disability. A disability purchase insurance policy helps finance the purchase-sale agreement to purchase property from a totally disabled business. this coverage allows the business to continue without interruption or the obligation to finance the purchase with business assets/income. This policy must be purchased for each owner according to the percentage of ownership of him.
executive exclusion
Many key employees believe that in the event of disability, a sufficient portion of their income will be replaced. this is not reality. traditional group long-term disability insurance typically covers up to 60% of earnings, up to a maximum monthly benefit cap. this restriction on your income is often overlooked. This coverage can bridge the gap for high-income earners whose earnings exceed the monthly disability benefit cap. An executive opt-out plan may be offered as a form of incentive compensation by an employer to executives or on a voluntary basis.
contact abbey j. bowersox, clu® today for disability insurance planning techniques for your business. email [email protected] call 727-522-7777 x150 or simply complete and submit the following form:
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