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Business Owned Disability Insurance
Provides essential financial support to maintain your company's operations and cover expenses in the event of an owner's or key employee's disability
What is business owned disability insurance?
Business-Owned Disability Insurance encompasses three separate solutions, each tailored to specific business scenarios: Key Person Disability, offering financial protection if a vital employee becomes disabled; Buy-Sell Disability, designed to facilitate ownership transitions in case a business owner is incapacitated; and Business Overhead Expense, which covers essential operational costs when an owner or key employee is unable to work.
Each solution addresses distinct aspects of business continuity and risk management, ensuring comprehensive coverage for a variety of potential business challenges.
Key Persons
Essential funds for operational continuity and personnel replacement if a vital employee becomes disabled.
Buy-Out Preparation
Sets up a financial plan for partner buy-outs in case of disability of a shareholder/owner.
Business Continuity
Ensures regular monthly payments to pay regular expenses and maintain business operations.
Types of business-owned disability insurance
Explore Coverage Options for your Business.
Key Person Insurance
Ensure business continuity if you lose personnel vital to your business due to disability.
Business Overhead Expense
Ensure your business will continue to operate if you are disabled due to an accident or illness.
Buy-Sell Insurance
Protect your business, heirs, co-owners and partners by ensuring smooth execution of a buy-sell agreement should an owner become disabled.
How do the types of business-owned disability insurance compare?
An advisor can assist you in determining which is the most appropriate tool given your unique personal circumstances.
- Enables focus on personal recovery without additional business stress.
- Retains essential staff by meeting ongoing payroll obligations.
- Covers ongoing operational costs.
- Minimizes business interruption and maintains client trust.
- Shields the business from revenue losses and unexpected operational expenses due to the absence of the key employee.
- Covers costs associated with hiring and training replacements if necessary.
- Offers capital to acquire the shares or interest of the disabled partner, ensuring business continuity.
- Provides a safeguard for business expenses directly tied to ownership.
- Maintains creditor and supplier confidence with assured financial management.
- Facilitates a smooth ownership transition, averting disputes among shareholders or partners.
Get help with your business disability insurance planning.
Speak with a professional advisor who can help.
How much does business disability insurance cost?
There are a number of factors that can affect plan pricing, including:
Age & Gender
Generally, insurance cost less for younger age groups, and more for older age groups. Females are statistically more likely to have more prolonged disabilities compared to males.
Occupation
Insurance costs are affected by the relative risk associated with your profession/industry.
Coverage amount
Naturally, larger coverage amounts cost more than lower coverage amounts.
Benefit period
This is how long your policy will pay a benefit for. The longer the duration, the higher the cost.
Waiting period
This is how long you must wait before your policy will begin to pay a benefit. Shorter the duration, the higher the cost.
Health history
Insurance cost can be affected by health history. Cost will be lower when there is little history.
How much insurance coverage do you need?
This will depend on your unique business circumstances. Here are a few things to consider:
A key person's value to the business
Cost of replacing a key person
The regular ongoing expenses a business has
Business debts and financial obligations
The value of other shareholder's shares in the business
A professional advisor can assist you with calculating your insurance needs.
Get in touch
Talk to an advisor who can understand your situation, answer your questions and help you build an insurance plan appropriate for your business.
Frequently asked questions
Answers to key questions about Business-owned Disability Insurance
Eligibility typically includes business owners, partners, and key employees whose inability to work would significantly impact the company's operations. The specific criteria can vary based on the insurer's policies and the nature of the business.
The tax implications can vary. Generally, premiums paid for Business-Owned Disability Insurance are not tax-deductible, but the benefits received are often tax-free. However, it's important to consult with an advisor for specific advice, as tax laws can differ based on the structure of the policy.
The cost of premiums depends on several factors, including the size and type of business, the roles of individuals covered, their age, gender, and health status, and the amount and scope of coverage. Risk factors associated with the business and its industry also play a role.
Yes, most insurers offer customizable policies to fit the specific needs and risks of a business. Coverage amounts, terms, and specific conditions can often be tailored to match the unique aspects of the business.
To claim benefits, the policyholder must provide proof of the disability, typically through medical documentation. The insurer will review the claim against the policy terms. Once approved, the insurance company will disburse funds according to the policy agreement.
Still have questions?
Please contact our office and we'll be happy to address any questions you may have.
