As a prudent business owner, you know that planning for the future is key to running a successful company. This includes taking preventative measures against unforeseen circumstances, such as an unexpected injury or illness. Here’s what you can do as a business owner to protect yourself, your employees, and your business from the devastating financial consequences of an unexpected disability.
Individual disability insurance to protect your income
The Social Security Administration reports that one in four of today's 20-year-olds can expect to be out of work for at least a year due to a disabling condition before reaching normal retirement age. Business owners are not exempt from the ranks of workers that face the risk missing work for such an extended period of time. Whether you are a “solopreneuer” or employ a small team, the need to protect your income is real. That where individual disability insurance comes in.
An individual disability insurance policy will replace a percentage of your lost income if an injury or illness prevents you from working. While an individual disability insurance policy is not designed to pay everyday business expenses, such as payroll or office rent, it will help you keep up with your daily living expenses. Your individual disability insurance policy will allow you to recover from your condition without facing the risk of financial ruin. Think of it as protection for your paycheck.
To see how much an individual policy will cost, you can get a personalized disability insurance quote from Breeze.
Group disability insurance to protect your employees’ income
Your employees are not immune to the risk of experiencing a disabling event either. Chances are they have had friends, family members, or co-workers that have missed work for an extended period of time due to an injury or illness. If so, they have seen the negative financial impact it can have.
If they keep a written monthly budget, this serves as a solemn reminder that they have substantial ongoing personal expenses that require a steady stream of income. Many working Americans are one missed paycheck away from a financial disaster due to a lack of savings. Going without income for weeks or months could lead to personal bankruptcy or other financial calamities such as eviction or foreclosure.
For serious injuries and illnesses, employers can offer long term disability insurance coverage to their employees as part of a group plan. Providing this benefit can help give your employees peace-of-mind knowing that their income is protected. For more temporary conditions, employers can provide group short term disability insurance.
Business overhead expense coverage keeps your business running
Business owners not only must consider protecting their personal income to cover their living expenses, but they also need to take steps financially to ensure that they have a business to come back to when they're physically or mentally ready. Many times, the business is the most significant asset and liability that the owner controls, and yet they neglect to protect it. In addition to protecting the business from failing, business owners also have a responsibility to protect their employee's interests and keep the business solvent for everyone that works there.
Another type of disability insurance for self-employed individuals is business overhead expense coverage. Business overhead expense policies can help keep a business's lights on and employees working in the event the owner suffers a debilitating illness or injury. It provides coverage for things such as:
- Business expenses: Rent, utilities, office supplies, janitorial services, and other day-to-day operating costs needed for business continuity
- Payroll: In addition to the business owner, employees are the business's biggest asset. In many cases, they have helped build the company, and the success and longevity of the business depend upon their productivity. To retain employees, payroll must be met on time to ensure employee and customer retention and the survival of the company.
- Loans and taxes: In many cases, loans have been taken out by the owner to start the company, or to purchase capital equipment. These loans still must be paid back on time when a business owner becomes disabled. Payroll taxes and income taxes must also continue to be paid for the business to continue.
With business overhead expense coverage, you can rest easy knowing you can continue the day-to-day operations of your company, even if a disabling injury or illness prevents you from working.
These are some critical steps and precautions you can take as a business owner to protect against the unexpected. A disability can strike anyone at any time, and business owners are not exempt. Not only do you need to take of yourself financially, but you also have the added responsibility of caring for your employees and your business. With the proper planning and due diligence, you can weather just about any storm that comes your way.
For more information on small business insurance, review this article from SmartBiz University:
About the Author
Colin Nabity is the CEO & Co-Founder of Breeze, a digital-first insurance company that offers simple, affordable disability insurance for working Americans.