Protecting Your Business

How does a business owner protect their business if the owners are unable to work?

In my February post, I discussed the importance of Jennifer and Sandra agreeing to complete a buy-sell agreement to protect their share of the business. This coverage protects each shareholder from a financial loss in the event of the death or if the business owner becomes unable to work due to injury or illness.

How will the fixed costs of the business be covered?

Let me remind you of the risks                                                                

There is a 54% chance that a business owner age 30 will become disabled for three months or more between the age 30 and 65 and 33% change for a business owner age 50 will become disabled for three months or more between age 50 and 65. Also, if your disability lasts more than 90 days, the average length of that disability will be 2.5 years’ for a business owner age 30 and 3.1 years’ business owner age 50.*

The business owner can buy insurance to protect their income from disability or illness but how does the business owner pay all his business overhead expenses.

The following business overhead expenses are reimbursed by a Business Overhead Expenses policy:

  • Rent
  • Interest payments on outstanding eligible business debts
  • Utilities (heat, water, telephone, electricity, etc.)
  • Non-attorney employees’ salaries and payroll taxes
  • Postage and stationery
  • Equipment maintenance
  • Rental, lease, or depreciation of office equipment
  • Monthly average of taxes on the premises
  • Insurance premiums for Workers’ Compensation, Employee Health Plans, Employee Taxes, General Liability, Professional Liability/Malpractice
  • Accounting fees
  • Professional memberships and subscription dues.

When you’re a self-employed business owner you are the key contributor to the success of your business, so consider the impact if you were unable to work due to a disability for any length of time.

Business overhead expense policy provides the following benefits

  • Benefits range from $1,000 to $6,000 per month depending on your individual business overhead expenses.
  • Premiums may be tax deductible.
  • Benefits start as early as 30 days from the date of your disability.
  • You can purchase coverage between the ages of 18 and 69.

You don’t want to allow a personal disability to disable your business as well!

*Edge Benefits underwriten by Co-Operators

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