Business Disability Insurance

Running a business is quite an undertaking and protecting it from unexpected events is the responsibility of the owner. Some of the issues that have to be considered are:

  • If a partner or employee becomes disabled, what steps have to be taken to pay their salaries during this time?

  • How much can be afforded and for how long?

  • Will there be enough funds for rent, operating expenses and payroll?

  • If a partner has to leave, is there enough money to buy them out? How and who decides that the terms of a buyout are being met?

Just like people rely on their salaries to pay for expenses, a business depends on the owner or the people running it to pay all the necessary bills to keep it running. Many factors play a role in keeping a business open and running smoothly. Insurance carriers have policies to cover these kinds of situations and contingencies – especially considering the fact that disability rates are going up.

How much insurance does one need?

As an owner, one has to review assets and what one owes to determine how long one can manage without income. The fact remains that 100% coverage is not possible – one can get coverage for about 50-60% typically. This amount can go up to 80% depending on how much one is willing to pay.

Tips for Buying Business Disability Insurance:

  • Defining Disability: Depending on the type of business, take into account all the possible disabilities and buy coverage accordingly.

  • Tack on Cost of Living Adjustments- this will help to keep up with rising costs and inflation.

  • Checking Associations: Industry associations offer several benefits and different kinds of insurance plans – take advantage of the special rates.

  • Types of Disabilities: Not all of them will be covered under a single policy. Job specific ones have to be accounted for and coverage purchased accordingly.

  • Guaranteed Insurability: Don’t ignore this clause – one can add more insurance in the future without having to go through medical tests to qualify.

  • Non Cancelable policies: This type of policy offers fixed premiums and benefits and is the best option to keep costs steady and the benefits as well. It is a bit higher in price but worth it in the long run.

  • Checking Financial Ratings: Check ratings of carriers to ensure that they are stable and financially viable as a business. These ratings can be found on the internet or through the insurance broker.

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