Small business insurance against disability

When everyone else around you slows down at the end of the working day, you are the one still working hours later when they have all gone home. This is part of the positive commitment everyone has to make during the start-up period. You are the can-do guy, the energizer bunny who keeps on working to get the business up on its feet. Then, just because it starts to pay its way does not let you off the hook. Now you are all about growth.

You know if you take your foot off the gas pedal, those little shoots will not grow into a sturdy plant (or even a big tree). So the first threat most people think about is an early death. Unfortunately, there is a link between the levels of stress in starting a new business and heart attacks. In younger people, it is fairly remote but, as you age, the risk of dying increases. You add in life insurance coverage to protect your family. Giving them a lump sum will see them able to survive. You may tie this cash into some degree of succession planning to enable the business to keep on running. It depends on whether you have family members or other trusted individuals who can take over from you. But most people leave it at that. Unfortunately, among younger people, disability is far more common than death.

Disability covers a whole range of physical problems arising from an accident or illness. It may be you lose your mobility or an injury may prevent you from using your skills. Now the issues are more complicated and simply receiving a lump sum as on death, is often not going to be helpful. So, for planning purposes, do you have reliable people who could keep the business going while you recover or learn how to cope with more permanent problems? This may involve a loss of profitability. That is less important than still having a functioning business to come back to. If the answer to this question is “yes” and the business can survive a period without your practical contribution and continuing supervision, you need to consider insuring against the loss of profit or look for a policy that will pay a proportion of your business overheads during your absence. Either way, the investment of capital and your time will be protected. But if the business is dependent on your specialized input, then you will be looking to sell it or wind up in an orderly fashion. This failure makes some level of payment to you essential.

When it comes to buying this type of policy, talk through the issues with your small business insurance agent. You need to understand what physical conditions the different insurers consider disabling and, most importantly, how quickly they begin paying out. Understand that many insurers have a waiting period to assess the degree of disability. You will also need to check your state’s law. Many cap the amount payable on small business insurance against disability. If so, you cannot avoid these limits by buying several policies. These are cumulative limits. Get the best advice to protect your interests.

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