Ways to protect your business if you become disabled

Ways to protect your business if you become disabled

As a business owner, you are always thinking about ways to improve and grow your business. But are you also thinking about protecting it if you become disabled? Discover two effective ways insurance can help cover the risk of disability: Business Overhead Expense (BOE) disability income (DI) insurance and a Buy-Sell Plan that includes DI. 

Disability income insurance helps protect your income if you are too sick or hurt to work. You might be familiar with DI as it helps to protect your income for your personal needs, but what about your business expenses? A BOE policy helps to specifically cover your business needs during your disability period.

What about succession planning for your business if you become permanently disabled and are unable to return to work? A Buy-Sell agreement is an effective way to provide for an orderly change of ownership when an owner becomes disabled.

Business Overhead Expense

You have worked hard to build your business. BOE insurance from Ohio National can help you pay for expenses such as employee wages and benefits, leases, and bills while you are unable to work.

How it works:

  • Available to businesses with fewer than six owners and fewer than 20 employees.
  • This coverage is designed to reimburse owners of small businesses not operated from the home for the normal and customary expenses required to maintain the business.
  • As the insured business owner, you must devote full-time service to the business and be personally liable for expenses. Only your share of the business expenses are covered.
  • As the insured, you must produce substantial income for the business such that your disability would cause great disruption or even failure of the business.
  • Two policy types are available: Non-cancellable and Guaranteed Renewable.
  • Benefit periods of 12, 18 and 24 months.
  • Waiting periods of 30, 60 and 90 days.
  • Maximum monthly benefit (ranging from $15,000 to $50,000) varies by occupational classification.
  • Optional Residual1 or Partial Disability Rider1available.
  • Optional Salary Expense Rider1 helps cover the cost of hiring someone to work in your capacity.

Buy–Sell Agreement

A Buy-Sell Agreement is an agreement providing for the sale of a business when a specified “triggering event” happens, such as a disability. A DI policy provides the funds for the Buy-Sell Agreement.

A fully funded buy-sell agreement can:

  • Predetermine the price at which the buyer agrees to purchase, and the owner agrees to sell, their interests in the business.
  • Create a market for each owner's share of the business.
  • Provide money to fund the purchase at the exact time it is needed.
  • Establish the business' value for federal estate tax purposes.

Advantages during a business owner's life:

For all business owners: A funded buy-sell agreement gives business owners the peace of mind that comes from planning for their and their families' financial security.

For creditors, suppliers and customers: A funded buy-sell agreement helps to assure such people that the disability of a business owner will not disrupt the day-to-day operations of that business.

For employees of the business: Buy-sell planning provides employees with a sense of security that comes from business continuity.

For all remaining business owners: A fully funded buy-sell agreement gives remaining owners or the business the opportunity and the cash to purchase an exiting owner's business interest at a fair price.

How it works

  • Business owners adopt a plan that will accomplish an orderly transfer of the business upon a business owner's disability
  • Disability Buy-Sell insurance provides money to assist in the purchase of the disabled owner’s (the insured) interest in the business.
  • At disability of the business owner, disability benefits pass income tax-free to the remaining business owners or business.
  • The remaining business owner(s) end(s) up with the business.
  • The disabled owner receives a fair price in exchange for the business interest.

We’re here to help

Learn more about disability income insurance or talk to your financial professional today about obtaining BOE or Buy-Sell insurance.

1Optional riders may be purchased for an additional cost.

Disability income insurance policies issued by Ohio National Life Assurance Corporation. Product, product features and rider availability vary by state. Guarantees are based upon the claims-paying ability of the issuer. Disability income insurance is not available in CA. Issuers not licensed to conduct business in NY.

Disability income insurance policies contain exclusions, limitations, reduction of benefits and terms under which the policy may be continued in force or discontinued. For complete details of coverage, contact your financial professional or the company.