Disability Insurance 11 - Disability Insurance for Business Overhead Coverage

As we mentioned in the other articles, the main purpose of disability insurance is to to replace an individual's income should they be unable to work as a result of either an accident or a sickness. In fact, People tend not to spend a lot of time thinking about the financial devastation that could result from a disabling injury or sickness therefore if disability strikes, the balance between personal earnings and expenses suddenly is upset, and the threat of financial disaster can quickly become a reality.
Since a business owner is responsible for a variety of fixed expenses. Some examples include rent, salaries of employees and utilities. If the business owner suffers a disability, these expenses continue, but the income-earning capacity of the business may be significantly reduced. there fore business overhead disability insurance is important in maintaining the business in case of disability.

This coverage is also available to self-employed professionals and business owners who:
a)are directly involved in the business
b) Whose participation is essential to the continuing business operations.
This helps to serve as an incentive for the insured to return to the business.The benefit period for such plans is usually a short duration about 12, 24 or 36 months.
In this type of disability insurance, insurers set maximum monthly benefit limits based on the person's occupation class. However, as discussed below,
i) the benefit period and
ii) monthly benefit have different implications for this type of policy.
and the elimination periods are generally shorter and use to be 30 or 60 days because the business is required to re-start quickly to ensure that the business continues to operate and the benefit provided by business overhead coverage is limited to the business expenses incurred during a given month. Therefore, the monthly benefit that is paid by the policy can vary from month to month, and from client to client. The combination of benefit period and monthly dollar benefit define the total amount of dollars that can be paid per claim.
Since they are designed to reimburse business expenses, the premiums payable under Business Overhead plans are deductible for tax purposes. The benefit payments are taxable to the business. However, the benefits are offset by deducting the business expenses that have been paid with them.

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