How can disability insurance protect your business?
As a business owner, you must also protect the business you have worked hard to establish and grow. Special policies, available from the same insurers that offer high-quality individual coverage, offer business protection while you recover from a disability.
Consider a separate type of disability policy known as business overhead expense (BOE) to help meet the expenses of running the office while you are disabled. Benefits from these policies provide reimbursement for expenses incurred, such as rent and utilities as well as interest on debts.
What about business owners who are in partnership or who aren’t the sole owner?
Business owners who are in a partnership or have co-owners should consider a policy known as a disability buyout (DBO). In much the same way that life insurance benefits can be set aside to fund a buyout by the surviving partner if the other partner dies, DBO is designed to fund the purchase of the disabled partner’s share of the business by the nondisabled partner. Such a policy can be in place before a disability occurs and may be used to sustain the business.
Furthermore, in combination with the disabled partner’s individual disability income coverage, a DBO policy can permit the business to continue to generate income for the working partner while the disabled partner is supported by the benefits from an individual DI policy.
As part of your overall business planning, you owe it to yourself to look into protection for the one thing that makes all other planning possible: your ability to earn an income.
Alfred P. Robertson, CLU®, ChFC®, is a general agent with the Mathis-Hill-Robertson Agency of the Guardian Life Insurance Company and is executive vice president of Peachtree Planning Corporation. Reach him at (404) 260-1628 or [email protected].