Disability Insurance for Businesses

Do you know there is a type of insurance that may can help keep your business afloat in hard times? Business Overhead Expense (BOE) insurance is particularly suited for a smaller company or practice that depends on a few people for most of its ability to operate successfully.

WHAT IT DOES

When a person crucial to the business's success can't work because of a disability defined by the insurance contract, BOE insurance can cover certain everyday expenses. These expenses can range from employee salaries and employment taxes to mortgage or rent payments, utility bills, and insurance premiums. The policy will typically have a monthly cap for what it will pay.

BOE insurance may have an elimination period of 30 to 90 days or longer before it begins paying benefits.

Policies typically have a maximum term during which benefits are paid, with the most popular being a year or two, although some are longer. This differs from disability income insurance, from which payments can last until age 65 or beyond, depending on the policy terms. Premiums for BOE are generally tax-deductible, but benefits are taxable. Remember, though, that the benefits typically pay for expenses your business may still deduct.

THE DIFFERENCE

While BOE insurance benefits protect your business financially by paying many fixed expenses, it may not pay for the owner's salary. That's where disability income insurance comes in.

Disability can happen to anyone. According to the Social Security Administration, more than one in four 20-year-olds will become disabled before reaching retirement age. Talk to your insurance professional to learn more.