Business overhead protection insurance

Business Overhead Protection

As a small business owner, you’re focused on running your company and taking care of the priorities. But, there’s something else to think about... what would happen to your business if an accident or illness kept you from working for several months or longer?

The good news is, even if the unexpected happens, you can keep the doors of your business open with Overhead Expense (OE) insurance. It doesn’t replace you, but it does provide financial support, so you can continue to pay fixed business expenses during your recovery. Get Your Quote

Up to $50,000 a Month

Overhead Expense (OE) insurance can provide up to $50,000 per month of financial support that helps you pay for:

  • Employee salaries
  • Rent/mortgage
  • Insurance premium and more

Basically, expenses that will be covered under this policy are the same expense that are deductible for federal income tax purposes.

How It Works

Disability income insurance is designed to replace a portion of an insured’s income if he or she is unable to work due to sickness or injury. Just as personal disability income insurance can ease the losses on the first budget (personal expenses), Business Protection insurance can go a long way to diminish the additional losses to the second budget (business expenses).

Let’s look at an example (Option A): Tom brings in $100,000 gross income per year from his small business. Of this amount, Tom declares $40,000 taxable income. Personal disability income issue guidelines allow him to insure approximately 70% of this amount. This is the amount he would have available to pay expenses for both budgets if a disability occurs.

However, if Tom adds Business Protection to the equation (Option B), he is allowed to insure an additional amount of the $100,000, so that an extra $35,000 becomes available to him, resulting in a total of $65,000 now available to pay expenses. On top of that, the affordable premiums he pays for Business Protection coverage are generally tax deductible!

One important detail: Business Protection only covers fixed business expenses. It won’t cover the cost of buying new inventory, equipment or property improvements — anything that’s above and beyond the basic overhead of the business.

Another cost Business Protection doesn’t cover is the disabled owner’s salary. For this, you would need to have individual disability income insurance — which you should consider if you do not already have coverage. After all, you have your own fixed expenses at home, too.

 

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