Savvy business owners understand that preparing for unforeseen circumstances is more than just part of the job. It’s key to small business success.

Unfortunately, doing so can be tedious, time-consuming, and overwhelming. It requires you to ask a number of difficult questions, like:

  • What if I become too sick or hurt to run my business?
  • What if the same thing happens to one or more of my employees?
  • What if I fall behind on my financial obligations — personally, professionally, or both?

The list goes on and on. Although exploring these “what-ifs” may be unsettling, planning for what could go wrong is a big part of what goes into making sure things go right. With this in mind, let’s take a closer look at three types of disability insurance that can help protect you, your people, and your business.


Protect what you earn with individual disability insurance

Approximately 25% of working individuals today will be unable to perform the duties of their job for at least a year due to a disabling injury or illness before they retire.1 While this estimate from the Social Security Administration is rather grim, it helps highlight the very real need for income protection, especially among small business owners.

For the many self-employed workers, it is probably difficult to imagine what would happen if you couldn’t tend to your business for one month. But an entire year? Whether you manage a team of employees or rely solely on yourself to run your operation, that’s simply not an option. That’s why the income protection offered by long term disability insurance is so important.

Long term disability insurance is designed to replace a portion of earnings if a serious injury or illness keeps you out of work for three months or longer. Having your own long term disability insurance policy will allow you to continue to meet your financial obligations in your personal life. Because without an active source of income, how will you keep up with your mortgage, car, and student loan payments? Of course, basic day-to-day living expenses for you and any loved ones who rely on you to provide for them cannot be overlooked either. Your long term disability insurance coverage will enable you to focus on recovery from your condition without facing the risk of depleting your life savings, falling behind on bills, or foreclosing on your home.

Thanks to technology, buying an individual long term disability insurance today is easier than ever before. A quick, simple way to get started is to check your rates with a free long term disability insurance quote online. This will allow you to evaluate your needs and figure out what you can actually afford before you apply for coverage.


Protect what your employees earn with group disability insurance

If you are a solopreneur, you’re used to the responsibilities that come with this level of professional independence and freedom. If you’re unable to work, there’s no one else to call upon to pick up the slack. In the event of an unexpected disability, at least your individual disability insurance policy will help supplement the income you lose while you’re away from work.

For many small business owners though, flying solo isn’t practical. You want to recruit and develop a diverse team of driven individuals that will have your back and help you grow. But as a business owner and leader, you also have to prepare for the possibility that any number of your employees could experience a serious injury or illness that leaves them disabled and unable to work. Not only will they be faced with the same negative financial consequences discussed above, but this can also directly impact the business they’ve helped you build.

Unfortunately, a large percentage of American workers are just a missed paycheck or two away from facing a financial catastrophe at home. According to Bankrate’s January 2019 Financial Security Index, 60% of Americans do not have enough savings to cover $1,000 in emergency expenses.2 Without an active stream of income, your employees are left with very little wiggle room before they fall victim to debt, foreclosure, or bankruptcy.

Depending on the size of your business, you may be able to offer an affordable group disability insurance plan to your members of your team. Employer-sponsored group disability insurance plans can be either long term or short term in coverage and typically are made available to employees at little to no cost for members of the plan. However, this employee benefit does have plenty of limitations. Benefits are capped and coverage is contingent upon employment. That’s why, whether you can offer group coverage or not, it’s important to educate your employees on the individual disability insurance options that are available to them as well.


Protect what it costs to run your business with BOE insurance

In addition to protecting your individual income and helping your employees protect theirs, you also need to make sure your business has what it needs to keep running in uncertain times. Otherwise, you may not even have a company to return to once you’ve recovered. First and foremost, you need to protect your business from failing. But you also have a duty to honor the best interests of your team and maintain the solvency.

This brings us to the third type of disability insurance for self-employed workers that you as a small business owner need to familiarize yourself with: business overhead expense insurance, or BOE for short. BOE coverage can provide the financing you need to keep everything running smoothly if you, the owner, endure a serious illness or injury. As a small business owner, here’s what your BOE policy can do for you and your operations:

  • It can help you cover business expenses, such as rent, utilities, supplies, services, and other recurring costs required to keep your business running.
  • It can help you meet payroll, allowing you to retain your employees and keep them happy while times are tough.
  • It can help you stay on track with loans, like startup and equipment financing, and taxes, like payroll and income taxes.

The right BOE policy will provide you peace of mind knowing that you can afford to keep your lights on and your doors open if you become too sick or hurt to work. While it may not be business-as-usual, at least you have the resources you need to weather the storm.


Key takeaways

From serious illnesses like cancer and heart disease to musculoskeletal disorders like arthritis and back pain, no one is immune to the risk of becoming disabled — or the negative financial impact that comes with it. On top of caring for your own finances, being a small business owner also means also taking additional measures to care for the people you employ and the company you run.

In order to do so effectively, it helps to understand how these three types of disability insurance work and why each one is key to the success of your small business.

  • An individual disability insurance policy is protection for your personal paycheck.
  • A group disability insurance policy is protection for your employees’ paychecks.
  • A BOE insurance policy is protection for what it costs to run your business.

Without these types of insurance coverage, an unexpected disabling event can derail your business in a number of ways. Fortunately, proactive measures can be taken now to make sure your business is always covered.