What would happen to your company if you were unable to work due to a disability?
What do you think your chances are of becoming disabled? The Social Security Administration says that studies show a 20-year-old worker has a 1 in 4 chance of becoming disabled before reaching retirement age.* When you own a small business, your involvement is vital to your company’s success. What would happen to your company if you were unable to work due to a disability?
Even a short-term disability can be crippling. You might have to hire someone to take your place on a temporary basis. Or you might have to borrow money to pay the bills until you’re back on the job. A long disability for you could disable or even destroy your business.
Overhead Expense Protection
The costs of running a business are ongoing. Rent or mortgage payments, wages and salaries, property taxes and phone and utility bills — all need to be paid, whether you’re able to contribute or not. Overhead expense insurance is financial protection that helps pay some basic business expenses should you become disabled. A policy may also cover employee benefit costs, employment taxes, professional dues and more.
If you generate, or play a key role in generating, a substantial amount of your business’s income, then overhead expense insurance could be a financial lifesaver. A financial professional can assess your company’s specific needs and design an overhead insurance policy to help ensure your company’s survival.
Income Protection and More
If a disability prevents you from generating income for your business, then it will almost certainly disrupt your personal finances, too. Disability income insurance — which reimburses a portion of your income (according to policy limitations) — can offer protection should you become disabled.
Disability income insurance can also be used as a succession planning tool. Should you become disabled, a disability income insurance policy can provide all or a portion of the amount necessary for your business partners to buy your interest, according to the terms of a buy-sell agreement.
Finally, key-person disability income insurance helps reimburse your business for the financial loss that may result from a top employee’s absence due to disability. For example, if you have a salesperson, technical employee or researcher who is crucial to the success of your business, the loss of that person due to disability could end up being very costly for your business in the long term.
The Bottom Line
When you look at the numbers, it makes total sense to protect your business and yourself against disability. Your financial professional can make sure you have the protections you need.
Contact your Janney Financial Advisor today, to further discuss how to protect you and your business in the event of a disability.
* Disability Benefits, SSA Publication No. 05-10029, May 2015
Neither Janney nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. Janney Montgomery Scott LLC Member FINRA NYSE SIPC