Author: Dick Hartzen
A business owner may be surprised to learn that a small loss to business property ends up with a much larger loss of income. That problem may be solved with a Business Interruption type of coverage. What is often overlooked is the problem that occurs when the business owner is disabled for a short time.
A business owner may be surprised to learn that a small loss to business property ends up with a much larger loss of income. Waiting weeks for repairs can interrupt the required flow of business income. That problem may be solved with a Business Interruption type of coverage.
What is often overlooked is the problem that occurs when the business owner is disabled for a short time. Imagine the doctor, lawyer, accountant, insurance agent or other business owner that is unable to do his/her job. This may lead to dire circumstances.
Figures released from a major disability insurer point out:
Probability of a Disability lasting at least 90 days between the age shown in the table and age 65 –
Age Male Female
25 20.2% 29.9%
30 19.6% 28.6%
35 19.0% 27.0%
50 15.4% 18.1%
The Internal Revenue Service has issued Revenue Rule 55-26, 1955-2 CB11 to help eliminate this problem. A tax deduction is allowed as a business expense for a disability income policy that may cover:
Lease, rent & mortgage payments on business premises
Rental, mortgage or realty taxes
Installment payments for furniture and equipment
Premiums for business insurance
Accounting, billing and collection fees
Professional or trade dues or subscriptions
Janitorial and maintenance services.
The normal period of benefits provided is for 2 years or less. If a business owner is still disabled after that time, there is a little likelihood that it will be reopened in the future. The premiums are very reasonable due to the short term of coverage .
Professionals are an excellent market for these policies. The definition of disability is of major importance. “Own-occupation is a must along with a “residual disability rider”. The “own-occupation” rider eliminates the insured from having to worry about his/her previous training or education. The “residual disability rider” increases the amount of income that can be earned and allow benefits to continue.
Copyright 2010 by Richard I Hartzen. Used with permission.