Importance of Business Disability Insurance

Many people think that having an insurance is like putting your money down the drain. There are more important things were money can be invested. However, being a small business company is a different story and having a business disability insurance puts you ahead of the game. If your business is registered under a corporation, this means your business assets are safe from business liabilities. Reality is that something unexpected can always happen in the future, and having a business disability insurance is like having a safety cushion that will protect you from sudden events, like natural calamities, sickness, death, and many more.

What is a Business Disability Insurance?

What is a Business Disability Insurance? Don’t say it will never happen to you or your business when it comes to disability. A business disability insurance will cover 60% of an individual’s income if he or she is unable to work due to sickness or accident. You can have an option to enroll under a Group Disability Program through an employer, or an Individual Disability Program. If you have a huge budget, you may spare a small amount in a business disability insurance that will protect your income and that of your company’s, in case of unavoidable emergencies. It is a requirement by the law that businesses pay for the insurance of their workers and you may check with your state laws if you conduct business operations in Hawaii, New Jersey, New York, and Rhode Island.

What are the Types of a Business Disability Insurance?

You can categorize disability insurance policies into short term and long term. Short Term Disability covers short-term injuries or sickness. Benefits are given when a person cannot work because of an injury or sickness that is not work-related. There is a waiting period of 14 to 21 days and policies will run as long as 2-3 years. Long Term Disability covers any long term, serious injuries or sickness that will pay the person benefits for the rest of his or her entire life. These business disability insurance policies can be renewed each year, have the premium adjusted, or be canceled when premiums are unpaid. The payment of these benefits can qualify as tax deductible, or necessary expenses for your company ( IRS Code, Section 162 ). Also, if you start on a new business or new career, your benefits might be deducted or completely stopped.

Do You Really Need a Business Disability Insurance?

If you believe that social security will be enough when it comes to protecting your workers from disability, think of the long waiting period it takes for benefits to be released. Your business can then suffer great losses. It is important to assess how much you want to set aside for a business disability insurance, and see if it fits the coverage you will need when the time comes. Here are the seven golden rules in choosing the right business disability insurance for your firm:

1. Each insurance provider has their own definition of what a disability is and make sure you are well-informed on what will be covered, how long will the waiting period be, and what percentage of the income will be paid. Not all disabilities will be covered and it is important to know what might afflict your workers in the future.

2. Love your COLA ( Cost of Living Adjustment ) and tick this option when choosing your insurance policy. This will protect you from inflation rates. This will also make sure that your benefit rate rises with the yearly rise in cost of living.

3. Shop and compare plans. Check out your industry’s association for offers on group plans. Review existing policies and know if you can have an option to add a disability insurance on top of your current policies.

4. Don’t miss out on guaranteed insurability option which can add more coverage in the future, without requiring medical exams.

5. If you like to lock the rate of your premium and the benefits you will receive, you can opt for a non-cancelable policy. This will prevent you from paying higher prices for your policy.

6. Don’t forget about your business overhead expense ( BOE ) policies and key person disability insurance. These will keep your business running even if you, the owner, is recovering from a disability.

7. Be smart and find a reputable insurance agent that you trust, who will give you the best insurance policies in town. You can check with Standard and Poor’s financial ratings to see the financial capacity of your chosen insurance firm.

When speaking of business disability insurance, keep in mind that anyone, at any given time, can experience disability. It is your responsibility as a business owner to protect the welfare of your business and those of your employees. Disability insurance policies can always be tailor-made to suit your budget and needs. You may not appreciate the expenses now, but you will appreciate making a smart decision for that unexpected moment. Plan Your Future Well!

RESOURCES:

Zahorsky, Darrell. “ 11 Tips for Buying Small Business Disability Insurance. “ 2009. About.com.

http://sbinformation.about.com/od/insurance/a/disability_2.htm

Boop, Gregory. “ Business Insurance: Disability Insurance. “ 2009. About.com.

http://businessinsure.about.com/od/lifeanddisability/a/disins.htm

Tucci, Louis. “ Disability and the American Business. “ 2008-2009. Biz2Credit.com, LLC.

http://www.biz2credit.com/content/view/158/61/?lang=english