Owning a business often involves risks. But savvy entrepreneurs don’t take unnecessary ones. That’s why they buy insurance.
If you own a store, office, or factory, you likely have property insurance. Companies with employees have workers compensation insurance. Most businesses have general liability insurance.
Those types of policies protect the business. What about protecting you, the business owner?
What happens if you suffer a heart attack and can’t work for a few months? What if a car accident puts you in a coma? Imagine being slowed down by a respiratory condition.
As a business owner, you’re on your own. There’s no vacation time, sick leave, or workers’ compensation to help with the bills. If you can’t show up for work, you can’t get paid.
That’s why financially savvy entrepreneurs protect their personal income with a personal long-term disability insurance policy.
Long term disability insurance replaces your income in the event you can’t work due to injury or illness for an extended period. It can also help when you have to reduce the hours you work or limit what tasks you perform.
Why is long term disability insurance important?
It may seem like a long shot to be hurt or sick seriously enough to keep you out of work. But it’s estimated that 25 percent of American workers will endure some type of temporary disability during their careers that will prevent them from working.
Think about all the ways you could lose the ability to ply your craft. A self-employed mechanic or tradesman who suffers bad arthritis. A photographer or designer who loses partial eyesight. A computer programmer, accountant, or restauranteur who has a stroke.
When you invest in a personal long term disability policy, you pay a monthly, quarterly, or annual premium to an insurance company. The amount you pay is based largely on your income.
If a covered injury or illness affects your ability to work, a long term disability policy pays a monthly benefit to replace most of the income you will lose by not working.
You can select a number of coverage options, including how long benefits would last. Long term disability benefits can last from two to 10 years, or you can be insured up to age 65.
What about business overhead expenses?
In addition to insuring your personal income, you can also buy coverage that can help you manage your business overhead expenses if you become disabled.
Business overhead insurance (BOE) is a type of disability policy that covers monthly business expenses if you’re unable to work. This includes rent/mortgage, utilities, taxes, payroll, and other overhead expenses. The policy will pay a monthly benefit equal to your overhead expenses up to a cap, which is typically between $15,000 and $25,000.
BOE coverage can help ensure your business stays afloat while you recover from a disability. Otherwise, your future income may be at risk if your business folds by the time you can return to work.
You can obtain BOE coverage as a standalone policy or bundled with your personal disability policy.
Whether you’re a part-time entrepreneur or your business is your full-time job, you took a risk starting your own company. You don’t depend on somebody else for your full income.
But you should at least have a safety net to ensure your livelihood if you can’t work.
About Colin Nabity
Colin is the CEO & Co-Founder of Breeze, a digital-first insurance company that offers simple, affordable disability insurance for working Americans.
About Carson Derrow
