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How would your business expenses get paid if you were unable to work due to an injury or illness. Who would pay them?

Think About It

You run your business. Continuing revenue depends on you being able to work. When injury or illness strikes, life can change in an instant. Business is disrupted, your cash flow is at risk and could be depleted quickly in order to keep ongoing expenses paid while you recover.

Estimate Your Expenses

... The need for Business Protection insurance is clear: If you are temporarily unable to work, your business might have significantly less revenue coming in because of your inability to provide the services your clients and customers need. But you’d still be responsible for your many expenses: rent or mortgage payments, loan payments, insurance premiums and utility bills — not to mention employee salaries. Business Protection insurance can help cover these basic expenses for up to two years after a disabling event. So even though your revenue may decrease, the business can stay afloat while you recover.

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.

... To figure out how much Business Protection insurance your business needs, you’ll want to take stock of your expenses. You can use a business expense calculator to get started, or work call the My Protection Plus call center for help. You’ll also need to determine what share of the expenses are paid for by the revenue you, the owner, bring in. This is the proportion of business costs the policy benefit will cover.

Most insurance companies allow you to customize your Business Protection insurance policy with a number of different optional riders. These might include automatic benefit increases to reflect rising overhead costs over time; partial disability benefits, in case you’re able to return to work, but in a reduced capacity; or benefits to cover the salary of someone brought in temporarily to do your job.

And here’s a perk: The premiums your company pays for Business Protection insurance are generally tax-deductible. While the benefit payments, on the other hand, are taxable, they are used to pay for overhead expenses which are typically tax-deductible.

Estimate Your Expenses

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.