Disability Income Insurance
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Here are 3 challenges you can help a small business owner with.
1. Keeping cash flow going when they can't work. Individual Disability Income Insurance
Simple to explain and almost everyone has heard of Disability Insurance. It is "paycheck" insurance. When a person is too sick or hurt to work for 30, 60, 90 or more days this type of policy will provide a "pay check" generally up to 60 to 65% of pre-disability income. Don't forget to have your client consult their tax advisers regarding payment for DI Policies, rule of thumb is, that when a policy is paid personally the benefits are tax free and when employer paid or premiums are deducted then benefits become taxable as income.
Want to save a business owner premium dollars? Consider presenting a Multi-Life/List Bill DI Plan
Three or more individual disability income insurance policies placed in a year on individuals working for the same employer generally obtain a 10% premium discount and gender neutral rates. Gender neutral rates are very valuable to females-it can reduce premium up to 40%.
2. Keeping the business doors open. Business Overhead Insurance
This business disability insurance product will reimburse the expenses of a client's business in the event the owner becomes too sick or injured to work for a period of time (usually 30 days). This policy is designed to keep a small business running for a short time until the owner is back to work. Benefit periods are between 12-24 months.
To determine the need, consider that this type of policy typically pays for any deductible business expenses allowable on the business tax return, including the salary for a temporary employee to replace the disabled owner. Income taxes, cost of inventory and salary of the owner and or immediate family members are generally not reimbursed under a BOE Policy. Remember to have them check with their tax advisers about deducting the premium for this coverage.
3. Keeping the Business in tact
What happens when a business owner ends up with a disability that keeps them out for an extended period of time? This type of disability policy is designed for businesses that have partners or several owners or a key employee or other interested party who wishes to keep the business going. It allows the business to continue to operate if one of the owners becomes too sick or injured to work. The policy provides the cash for the other owner/owners to purchase the disabled owners share of the business. The benefit may be paid out as a lump sum or a monthly payment for as long as five years. Waiting periods can be from 1-2 years. Most often other owners or even key employees have negotiated a Disability Buy-Out contract. A typical Buy Out agreement triggers after 1 year of disability and as a result funds are needed to "buy out" disabled owner. We do as few as One business owner!
For the most accurate quotes, we need to know as specifically as possible what a person's occupations/job duties as well as current and last year's income or if self employed, income after Schedule C expenses. If working from home need to know if duties require them to leave home and if so, what percentage of the time.
If they have Group DI at work or other coverage in force we need details on waiting and benefit periods as well as amount of income being replaced or covered and lastly is it being paid for in part or in whole by the employer? With this information we can provide a quote to stand alone or "wrap around" existing coverage quote.
Our carriers offer Fully Underwritten DI plans & Non Med products too. If your client is insurable we can find a plan for you to present.
If they are "uninsurable" for a health reason we have Accidental DI coverage for them!
I don't know about you but just about every medical decline I have dealt with has said, "It won't be my (insert the medical reason for decline here), it will be an accident that gets me!" So, don't fret the underwriting!
Click here to send Bill Jr. an email for a quote or if you have DI questions.
This consumer approved Kiplinger DI video is a great resource to use with your clients.