Protect The “MVP”

You just may be your business’s most valuable player (MVP), and proper measures should be taken in the event you suffer a disability. To quality for Social Security disability benefits, you must be severely disabled and, even then, you will have to wait at least six months for payments to begin. Social Security disability was not intended to be an individual’s sole source of disability income, thus benefits are often less than what you might need to cover your regular living expenses. Disability income insurance offers protection against an accident or health crisis that limits your ability to earn income. Depending on your income, the maximum coverage you can buy may replace 45% to 75% of you pre-disability earnings. The policy’s cost generally depends on such factors as the risk level of your occupation, you age, health, and the scope of coverage. Consider the following policy features:

Definition of Disability. Carefully review the definition of disability in your policy. Some policies cover you if you are unable to work in the occupation in which you were employed or for which you were trained, or if you can no longer earn as much as you once did in that field. In contrast, other policies cover you only if you are unable to work in any occupation. This distinction can make a big difference if you become disabled.

Residual Benefits or Partial Disability Coverage. Under certain specified circumstances, if you become disabled and are only able to earn a portion of your previous income, residual benefits or partial disability coverage pays a portion of your benefits.

Guaranteed Renewable. With this feature, the insurer cannot refuse to renew your policy or change any terms, except for premium cost, as long as you continue to pay your premiums on time.

Guaranteed Insurability. This provision allows you to increase your monthly benefit, even if you experience health changes that would otherwise prevent you from obtaining additional disability coverage.

Cost of Living Adjustment (COLA). This feature helps protect your benefits against the effects of inflation during a long-term disability.

Also, consider a business overhead expense policy that can help cover lost profits and continuing fixed costs, such as salaries and ongoing business expenses, in the event you suffer a disability. In general, benefits are: paid monthly after a predetermined waiting period, limited to a maximum amount, and restricted to a specified length of time (often from one to two years). A disability income and business overhead expense insurance can help protect your livelihood and ensure your business stays up and running.

-Robert Catalano