Disability Insurance for Small Business Owners

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Disability Insurance For Small Business Owners

As a small business owner, protecting your income and ensuring the continuity of your business in the event of a disability is crucial. Disability insurance provides a safety net that can help cover living expenses, medical costs, and business overheads when you are unable to work due to illness or injury. This guide will walk you through the essential aspects of disability insurance tailored for small business owners.

Why Small Business Owners Need Disability Insurance

Income Protection

The primary benefit of disability insurance is income replacement. If you become disabled and are unable to work, the policy will provide you with a percentage of your pre-disability income, typically between 50-70%. This ensures you can maintain your standard of living and meet your financial obligations.

Business Continuity

For small business owners, disability insurance is about personal income and keeping the business running. It can help cover operating expenses, such as rent, utilities, employee salaries, and other overhead costs. This financial support is vital to prevent business disruption and protect your livelihood.

Medical and Rehabilitation Costs

Disability insurance can also cover medical and rehabilitation expenses that are not fully paid by health insurance. This includes physical therapy, home care, and modifications to your home or workplace to accommodate your disability.

Protecting Family and Dependents

If you have a family that depends on your income, disability insurance ensures they are financially secure even if you are unable to work. This protection extends to covering essential living expenses, education costs, and other family needs.

Types of Disability Insurance for Small Business Owners

Individual Disability Insurance

Individual policies are tailored to your specific needs and financial situation. They offer flexibility in terms of coverage amounts, benefit periods, and waiting periods. These policies are ideal for business owners who do not have access to employer-sponsored plans.

Business Overhead Expense (BOE) Insurance

BOE insurance is specifically designed to cover the fixed costs of running your business if you become disabled. This includes rent, utilities, employee salaries, and other essential expenses. BOE policies typically provide short-term benefits, usually up to two years, allowing you time to recover or make necessary business adjustments.

Key Person Disability Insurance

This type of insurance protects the business against the loss of a key employee due to disability. The policy provides funds to help the business cope with the financial impact of losing a key person, such as finding and training a replacement or compensating for lost revenue. You can also opt for multiple-person disability insurance if there is more than one key individual you would like to insure.

Small Business Disability Insurance

Factors to Consider When Choosing Disability Insurance

Coverage Amount

Determine the amount of coverage you need based on your income, living expenses, and business overheads. Consider both personal and business financial obligations to ensure comprehensive protection.

Benefit Period

The benefit period is the length of time you will receive disability benefits. Choose a benefit period that aligns with your financial needs and potential recovery time. Options range from a few years to coverage until retirement age.

Waiting Period

The waiting period, or elimination period, is the time you must wait before benefits begin after becoming disabled. Common waiting periods range from 30 to 90 days. A longer waiting period can reduce premium costs but requires you to cover expenses during that time.

Policy Definitions

Understand the policy’s definition of disability. Some policies cover both total and partial disabilities, while others only cover total disabilities. Ensure the policy’s terms match your needs and risk factors.

Disability Insurance For Small Business

How We Can Help

At The Annuity Expert, we understand small business owners’ unique challenges. As an insurance agency, annuity broker, and retirement planner for 15 years, we are committed to finding the best solutions at the lowest costs.

Your main concern is ensuring that your income and business are protected in case of a disability. We offer personalized guidance and support, ensuring you feel valued and understood. Our expertise helps you navigate the complexities of disability insurance, providing peace of mind and financial security.

What We Recommend

Step 1: Initial Consultation

Contact us for a free consultation. We will discuss your specific needs, assess your financial situation, and identify the best disability insurance options for you. The main benefit is clearly understanding your insurance needs and potential solutions.

Step 2: Customized Policy Selection

We will tailor a disability insurance policy that fits your unique requirements. During this step, we explain the coverage amounts, benefit periods, and waiting periods, ensuring you understand all aspects of your policy. The main benefit is having a policy that perfectly aligns with your personal and business needs.

Step 3: Ongoing Support and Adjustments

We provide continuous support, helping you make necessary adjustments as your business and personal circumstances change. The main benefit is having a reliable partner who ensures your insurance coverage remains optimal and up-to-date.

Features and Benefits

  • Personalized Policies: Tailored to your specific needs, ensuring comprehensive coverage.
  • Expert Guidance: Over 15 years of experience in insurance and retirement planning.
  • Continuous Support: Ongoing adjustments and support are needed to keep your policy relevant.

Overcoming Objections

“I can’t afford disability insurance.” We find affordable policies that fit your budget, ensuring you are protected without financial strain.

“I don’t need disability insurance.” The risk of losing your income and business continuity due to a disability is significant. Disability insurance provides crucial financial security.

Without proper disability insurance, you risk significant financial hardship and potential business failure in the event of a disability. Working with us ensures you have the protection and support needed to navigate these challenges confidently.

Contact us today for free advice or a quote and secure your financial future and business continuity.

Get Assistance With Disability Insurance Coverage

Get help or a quote from a licensed financial professional. This service is free of charge.

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Frequently Asked Questions

Is disability insurance deductible for an S Corp?

The good news is that an S Corporation can deduct individual disability income insurance premiums.

Is disability insurance pre or post-tax?

For individual long-term disability insurance, you would pay the premiums using after-tax income, which results in tax-free replacement or benefit income.

Can an LLC deduct life insurance premiums?

Can LLCs deduct life insurance premiums on their taxes? Even though the IRS allows LLCs to deduct most insurance premiums as a business expense, life insurance premiums do not qualify for this deduction.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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