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Before you say that it could never happen to me, consider the hard facts. According to the Disability Management Source book, severe disabilities have increased 400% over the past 25 years between the ages of 17 and 44. Before age 65, one in seven people will become disabled for five years or more.
 
What would happen to your business if you suffered a stroke or an accident and you were bed ridden for six months to a year?
 
As a business owner, you need to take the subject of disability insurance very seriously. When you become sick or disabled, you are still liable for all of the debts of your business. You could lose everything you own, everything you have worked so hard to create. Business owners are not typically covered by state mandated workers compensation. A sudden illness or injury without disability income insurance could be devastating for your life and your business. This is insurance for your most important asset, the ability to earn an income and pay your debts.
 
An individual disability insurance policy will pay up to 60% of your current income. However, it is difficult for a business owner to get the true coverage they need, as you have to prove up your income via tax returns or W-2.   Another caveat with individual disability plans is the ability to qualify for the plan if your business is a high-risk industry (typically manufacturing) the premiums out weigh the benefits. If you do qualify for a policy the premiums may be more expensive than the benefits you may never receive.
 
Disability policies guarantee benefits for a certain period of time. This is called the benefit period and can be anywhere from two years to a lifetime of coverage. The most common benefit period is two too five year benefit periods. In addition, they usually pay for any training or rehabilitation that you may need to help you get back to work. All disability policies have a waiting period until you start receiving benefits; this amount of time is known as the elimination period and ranges from 30 to 365 days. If you pay the premiums with after-tax dollars, the benefits you receive are tax-free. If your business deducts the premiums, then your disability benefits are taxable income.  
 
When determining your disability insurance needs, be sure to consider any costs, expenses or liabilities related to your business and how they will be handled. A disability buy-out insurance policy should be part of a well-crafted buy sell agreement to protect all owners. We can advise you on how to combine this coverage into one key person policy with disability income and a cash reserve account at an affordable monthly premium. By providing this protection you business will have funds available if and when the "what if" happens to you.