Small business owners have a unique need for disability income insurance. Imagine what could happen if you got sick, or if you were seriously injured and could not work—or run your business—for a long time. Could your business survive? Could your family?

Disability income insurance provides income replacement if the insured person is unable to work because of an illness or injury. By replacing a percentage of your pre-disability income, it allows you to continue to support your family and keep the business open while you recover. Business owners can purchase both short- and long-term disability insurance, as well as special disability insurance policies that help business owners protect their business and keep it afloat during the period of disability.

We can work with you to determine whether you need short- or long-term disability—or both—and whether or not you should consider any of the specialty disability polices described below.

Business Overhead Expense (BOE) Insurance

If you are unable to work because of an injury or illness, your business revenues could decline significantly. After all, you are your business; without you—even temporarily—could it stay afloat? BOE insurance pays for existing overhead expenses or other fixed costs while you are disabled, with the goal of keeping the company up and running until you can return to the helm. Covered expenses typically include employee salaries, rent, leases and utilities, and other ongoing fixed expenses. The premiums of BOE insurance are a tax-deductible business expense.

Key Person Disability Insurance

Key person disability insurance protects your business if a key employee is temporarily disabled. Because the business loses the value of that person’s knowledge, experience and skill, the insurance kicks in to strengthen cash flow and assure creditors of business continuity. It may even cover the costs of finding, hiring and training a replacement, if necessary.

Disability Buyout Insurance

Many small businesses that have two or more owners use buy-sell agreements that create the rules by which business assets will be transferred to the other owner(s) if one of the partners dies or is permanently disabled. The buy-sell agreement allows the remaining partner(s) to purchase the deceased or disabled partner’s interest in the business. Disability buyout insurance is the funding mechanism for the buyout in these situations, and transfers the risk of a partner’s disability or death to the insurance policy. In the event of one partner’s inability to continue his or her role in the business, the other partner(s) will have the money to purchase his or her share, and the business can continue unimpeded.

Have you given any thought to disability income insurance for yourself and your small business? Could your business continue without you?