BUSINESS OVERHEAD EXPENSE DISABILITY
You have worked hard to make your business successful. Have you stopped to consider what would happen to the business if you were to become disabled? Your income may be insured, but what about your business expenses? Who will pay them? Here are your chances…
The Chances of Disability Lasting Three Months or Longer Before Age 65 |
Current Age |
Probability of Becoming Disabled |
30 |
51% |
35 |
48% |
45 |
40% |
50 |
34% |
Overhead Expense Disability Insurance assures the owner of a business that the business will still be there when he is ready to come back after recovering from his disability.
Overhead Expense Disability Insurance usually can pay for some or all of these on-going expenses:
- Rent or Mortgage
- Property Taxes
- Insurance Premiums
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- Equipment Leases
- Accounting Fees
- Collection Expenses
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- Utilities: Phone, Electricity
- Other Fixed Business Expenses
- Salaries for Current Employees
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Consider the case of Dr. Anne Example, a dentist in the San Francisco Bay Area. She owns her own practice and has a disability buy-out policy that will transfer ownership of the practice to her two employees. The policy will buy out her interest after one year of disability. After speaking with her financial advisor, Dr. Example realized that she couldn’t afford to keep the practice running and meet her business expenses for an entire year without help. Her adviser recommended a Business Overhead Disability policy that would pay benefits for 12 months, to coordinate with the waiting period under her buy-sell policy and assure herself that her practice will go on without her.
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RESOURCES
For a discussion of disability income basics:
http://www.pueblo.gsa.gov/cic_text/employ/lt-disability/insurance.htm
The benefits of a policy may be income tax free [IRC §104(a)(3)]:
http://www.irs.gov/faqs/faq/0,,id=199752,00.html
Disability income is essential for professionals:
http://www.360financialliteracy.org/Financial+Topics/Protection+Planning/Articles/
Disability+Insurance/The+fundamentals+of+disability+insurance.htm
For additional information about the uses of disability income:
http://lifehappens.org/pdf/printable-consumer-guide/disability-pcg.pdf
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