Looking deeper into disability insurance for a Business Owner…. Business Overhead Expense

Business Overhead Expense (BOE) is a policy the assists business owners in paying operational expenses if they (the business owner) become disabled due to an accident or sickness and can no longer work.

Here are some of the most common asked questions:

1. What does BOE cover?
   1. Wages – Payroll and contributions for benefit; does not cover owner’s compensation
   2. Payroll Taxes
   3. Office Expenses – Utilities, equipment, custodial services, etc…
   4. Debts – Accounting, billing, and collection services. Installment payments on debt the business paid prior to disability.
   5. Dues and Fees – Licensing fees and professional fees.
   6. Real Estate – Rent or mortgage for the business.
   7. Insurance Premiums – Property and liability insurance premiums.
2. How long do you have to wait to receive benefits?
   1. Policies generally have waiting periods or “elimination periods” ranging from 30 to 90 days. Choosing a longer elimination period lowers premiums.
3. How long do benefits last?
   1. The benefit period is generally long enough to cover the business for an extended disability, normally ranging from 12 to 30 months.
4. Are there tax advantages with BOE?
   Yes, premiums are tax deductible but benefits are taxable.

Bottom line, BOE insurance helps pay for business expenses in the event the owner is disabled due to an accident or sickness. Take the opportunity to talk with your business owners to ensure they are secure in the event of an injury or sickness. Running a business is challenging and giving a client peace-of-mind in the knowledge they are protected is the first step in their healing process.

Reach out if you have any questions on how to design a Business Overhead Expense policy for your clients.

Kristi Munoz