Insurance for Business Owners
One of your greatest assets is the ability
to earn an income. If you were to lose that ability due to a disabling
accident or illness, how would you pay your bills, send your kids to
college, and save for retirement?
A disability can create substantial economic
hardship for individuals and their families. As a business owner, both
your personal finances and your business could be at risk.
One way to help protect against the financial
loss associated with a disability is to purchase disability income
insurance. If you pay the premiums, an individual policy can provide you
with a tax-free income stream while you are unable to work.
Weigh Your Options
When evaluating disability income insurance
policies, it’s helpful to consider the following.
A disability income insurance policy could
make the difference between financial security and financial hardship.
Don’t wait to consider this protection until it’s too late.
- Definition of disability.
You can typically choose between “own occupation” coverage and “any
occupation” coverage. With “any occupation” coverage, you can claim disability only if you are unable to perform any type of job. This
type of coverage is generally less expensive than “own occupation”
- Amount of monthly
coverage. You can purchase disability insurance that will replace a
certain percentage of your income —normally up to 50% or 60% of your
pre-disability income. You should purchase coverage that will enable you
to meet your monthly financial obligations.
- Waiting period. The
waiting period represents the amount of time that must pass between the
date you become disabled and the date that disability income payments
begin. The longer the waiting period, the less expensive coverage will
- Benefit period. The
benefit period can range from several months to life. The longer the
benefit period, the higher the cost of insurance.
The information in this article is not
intended to be tax or legal advice, and it may not be relied on for the
purpose of avoiding any federal tax penalties. You are encouraged to
seek tax or legal advice from an independent professional advisor.
This material was written and prepared by Emerald.
© 2012 Emerald Connect, Inc.