Disability Insurance in the Work Place

Insurance is a personal decision that must be carefully considered. Your needs will be different from the needs of the business next door. Speaking to your financial advisor or insurance agent is a good place to start. Evaluate your business risks and projected earnings and use those figures as a beginning estimate.

Disability insurance must first cover injury or illness to yourself, especially if you are, in essence, your business. It is estimated that nearly 30% of all Americans under the age of 65 will have some kind of long term disability of 90 days or more. Will your business survive if you are gone for that length of time? A basic disability insurance policy will make sure that the business does not dissolve during a long term illness or injury. An additional policy, called a professional overhead expense policy, will make sure that overhead expenses are reimbursed during these moments.

Protecting your employees is also something to consider. Some states require disability insurance for employees, but it is not required nationwide. Most insurance professionals recommend first getting the basic disability and the overhead expense policies first, and then consider either group disability insurance or individual policies on key employees. Another option is to offer voluntary disability insurance for your employees. With this option, the employee pays for their own insurance which costs nothing to the business owner. Negotiations can get your employee excellent rates through your own insurance provider, which saves them money, and everyone wins.

If you are not the sole owner of your business, but it is still a small entity, you would want to protect yourself from these same concerns happening to your partner. If he were to have an injury that kept him away from the office for weeks at a time, will you be able to keep the business going on your own? What if this becomes more permanent than originally thought? A well written disability policy would provide enough funds to buy out the disabled partner, leaving the other partner and business in satisfactory financial shape.

Finally, always consider the amount of insurance that you really do need. If your business is funded by a loan, just insuring the amount to cover the loan itself is not enough. If your business is destroyed, and your insurance only covers the loan amount, what will you live on in the interim? How will you rebuild your business without money?

Each different company will have different risks, and only an agent or financial planner can decide what is right for your individual needs and situation. Of course, some businesses will have more insurance needs by the inherent risks involved. A bike building garage is more dangerous than an office full of accountants for instance. Make sure that you are insuring not just a bank loan, but the full worth of the business and the costs involved in returning it to working condition if there is a problem. Know what your policy covers and what it does not, and consider buying any other individual policies that you and your planner feels necessary.

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