Here’s Why: If a small business owner suffers a disabling injury or sickness, how will the business continue to meet its expenses and remain profitable?
- Regular living expenses will continue to occur
- Business expenses will continue to occur
- Income from business may be interrupted
If the business is a one-man show or it relies on just few revenue producers, a disabling injury or sickness could sink the operation quickly. Think about it. If the owner was not able to run the operations or pursue new business, how long would the business survive? How could employee salaries be paid? How would the business meet ongoing expenses?
Business Overhead Expense is the Answer
Most business owners are not aware that they can protect their businesses in the event the owner experiences a prolonged disabling injury or sickness. Or they may never have considered how a disabling illness may impact the financial health of the business. You can show them everything that is at risk by explaining what expenses a BOE policy will cover:
- employees’ salaries ( not the business owner’s salary)
- employment taxes
- employee benefit costs
- rental payments for office space or equipment
- principal and interest on business loans
- accounting and legal fees
- business insurance
- general office supplies
BOE policies work differently than Individual Disability Policies
BOE policies do not pay a flat rate each month for expenses. Instead, they reimburse the business for expenses incurred up to the maximum benefit. BOE insurance benefits are also reportable as income, and BOE premiums are deductible as an expense.
BOE benefit periods are shorter–12- 24 months–just long enough to help the business manage the disability.
Opening the door for cross selling opportunities
Your BOE discussion will also open the door for cross-sell opportunities. Small business owners also need individual disability to cover their salary and distributions because the BOE policy does not provide income protection for the owner. In addition, if there is more than one owner, they may want to consider buy/sell disability protection that will provide the funding to buy out the disabled partner. If the company is dependent on employees who are key revenue producers, they may also want to consider a keyman disability policy for those employees.
Your small business clients worked hard to build successful companies. You can help them protect what they worked so hard to build by talking to them about business overhead expense coverage.
Source Brokerage can help you be a D.I. expert.