Suffering a debilitating illness or injury is something that none of us like to think about. However, it’s important that we do—and with May being Disability Insurance Awareness Month now is the ideal time to take action to protect your income in the event that you can no longer work. If you own a business, protecting your income-earning ability has even greater urgency because, to an unprepared business owner, an illness or accident resulting in disability can be devastating to your life and business.
Consider this: 50% of American’s couldn’t meet expenses after just one month without a paycheck. In addition, before the age 65, one in seven people will become disabled for five years or more. While this is sobering, it’s also a good reminder that circumstances can change quickly and that the best defense against the unknown is to prepare for it.
While you may be tempted to think that Social Security disability benefits or Worker’s Compensation can make up for your lost income if you can’t operate your business, the truth is, these safety nets are not guaranteed, the payouts you receive are unlikely to be comparable to your existing income, and it is often challenging to be approved for them; often taking two years or longer to obtain such from the Social Security Administration.
How much business disability insurance do you need?
For the reasons stated above, and your own peace of mind, you may wish to consider a business disability insurance policy. When considering this coverage, you’ll need estimate what your income needs would be in the event of an injury or accident that prevents you from working. This Disability Income Needs Estimator can help you determine what you may need.
When determining your disability insurance needs, remember that you generally cannot purchase 100 percent of your present earnings. Typical coverage is 60 to 75 percent of your gross income. In addition, you should consider how the cost of your policy is impacted by how long you can wait before you receive your first disability check.
Look carefully at what disability insurance options you may wish.
An insurance professional can help you determine which policy is best for you based on your specific situation by looking at factors such as the nature of your business, the duties that you perform, and the benefits related to extending your coverage to include a cost of living adjustment (COLA) option or a business overhead expense (BOE) plan. A BOE plan provides coverage for business expenses which may include payroll, benefits, rent, and utilities to keep your business running while you recover from a disability.
Let your insurance professional help you protect yourself and your business.
There’s no doubt that having adequate disability insurance is an important, yet often overlooked, way for business owners to reduce their risk and protect their standard of living should they be too injured or too ill to work. However, selecting the appropriate policy can be a complex decision which shouldn’t be based on premium price alone. Contact one of our insurance professionals for assistance in securing the right business disability insurance coverage for your company.
Glenn Newlin is a licensed life insurance agent from Blissfield, MI. Glenn has many years experience in life insurance sales and training and has been with Kemner Iott Benz since 2013. Glenn is the father of two, a member of the Kiwanis club in Blissfield, and a member of the National Association of Insurance and Financial Advisors.