ways to ensure that your business can survive without you

by Walter Daskowski

The pride of controlling your business destiny, making your own decisions and creating something tangible in the process is priceless. With that said, it’s still common for a business owner to be envious of a government worker simply because of their benefits. One of the biggest concerns is, “What would happen if I get injured and can’t go to work?” Cop, firemen, and teacher unions have negotiated that scenario into their contracts, but what most business owners fail to understand is that they, too, can achieve similar peace of mind.

Private owners can cover themselves through two types of insurance. The first and more common is an Individual Disability Policy, which will pay the owner up to 60% of his or her income up to age 65 or 67. If the policy is paid with after-tax dollars, payouts are tax-free and will continue as long as the owner cannot perform duties of the occupation.

As a business owner, just about any absence from a business can mean a significant decline in revenue. If one gets disabled and cannot perform everyday duties for six months to a year, they are in the position of laying off quality employees, falling behind on rent, insurance premiums, and other expenses.

There is, however, an opportunity to cover routine expenses by purchasing a Business Overhead Expense policy. This type of insurance differs in that its premiums are a tax deductible business expense, and wherein the owner is the insured and the business is the beneficiary. If the owner were to become disabled, the policy would reimburse the business for all routine accounts payable for up to two years (based on actual expenses, not anticipated profits), thus alleviating most short-term cash flow issues.