Disability Insurance: Overhead
As a business owner, is your business financially prepared to continue operations if you're disabled for an extended period of time?
Your financial responsibilities as a business owner go well beyond yourself and your family, your partners, employees and associates also depend on your ability to work. These responsibilities will remain regardless of your health. Disability insurance plans can be tailored not only to provide you with steady income but also to cover business overhead costs, pay off deferred income tax liabilities, pay salaries, or pay loans. These payments will continue for a range of 6 to 24 month period.
Disability Overhead Coverage is available to professionals in private practice, self-employed business owners and trades people if eligible from an occupational standpoint. To qualify for this type of coverage, the insured must be directly and personally involved in his/her profession or business, and his/her services must be essential to the continuation of the business. This benefit ceases at age 65.
A law firm has two partners, Bill and Ted, and 10 employees. Bill and Ted are practicing and are important sources of revenue. If Bill were to suffer a disability that would put him out of work for at least six months, a disability overhead plan would cover the expenses that the partner would have paid with the revenues he brought in. Since some clients who were represented by Bill may opt to change to a lawyer in another firm, paying expenses may become a worry. The Disability Overhead Plan would cover:
- Office Rent/Lease
- Salaries for the employees
- Insurance Premiums
- Bank loans
- Utilities (phone, electricity, etc.)
- Other fixed expenses