According to Ben Franklin, nothing in this world is certain but death and taxes. But if a small business owner suffers a disability from an injury or illness, there are a few other certainties he or she can count on:
- Regular living expenses will continue to occur
- Business expenses will continue to occur
- Business income will be severely interrupted
That could be the death knell for a small mom-and-pop outfit or a business that relies on just a few key revenue producers. Think about it. If a small business owner becomes temporarily disabled, how long would the business survive? How would employees’ salaries get paid? How would the business meet its monthly expenses?
For these businesses, a business overhead expense (BOE) policy can make the difference between remaining operational and shutting the doors – even filing for bankruptcy.
Stress the invaluable coverage to your clients
Your clients may never have considered all of the ways a sudden disability might affect their business. You can show them everything that’s at stake simply by listing what’s typically covered under a BOE policy:
- employee salaries
- employment taxes
- employee benefit costs
- rental payments for property and equipment
- principal and interest on mortgaged business property
- accounting and legal fees
- business insurance expenses
- interest on business debts
- property taxes
- general office supplies
There’s probably at least one expense on that list that many business owners have never considered when contemplating a disability!
How BOE policies work
BOE policies don’t pay a flat rate for covered expenses, since costs can fluctuate month to month. Instead, benefits are paid monthly up to the policy’s monthly coverage limit. BOE insurance benefits are also reportable as income and premiums are usually tax deductible as a business expense.
Also, there’s a difference between the benefit periods of individual disability insurance and BOE policies. Individual disability insurance policies can pay benefits up to age 65. But a BOE policy benefit period is typically short-term, from 12 to 24 months – just long enough to help the business manage the crisis of disability.
Cross selling opportunities
Of course, it’s a good idea for all business owners to have individual disability insurance policies. In addition, business owners may also want to consider key person insurance to protect the business if an owner or key person becomes disabled. And, buy-sell insurance is recommended particularly for businesses with multiple partners.
Your clients’ small businesses represent the culmination of their hopes, dreams, and hard work. Many of them likely hope to pass their business on to their children. You can help them keep those dreams alive by stressing the importance of having business overhead expense disability coverage.
Need a great business overhead expense sales tool? Download our free client handout, “What Expenses Are Covered By BOE Policies?”