Business Overhead Insurance: The Forgotten Coverage – Zehr Insurance Brokers Ltd.

Business Overhead Expense (BOE) disability policy– for $3K/month tax free benefit paid to the business, with coverage payable for up to 24 months and a 30-day waiting period=cost of $79.30/month

Individual disability policy– Based on declared income of $24,000 he only qualifies for $1,575/month tax free benefit, coverage payable to age 65, with a 30 day waiting period=$143.28/month.

Therefore, he gets more coverage ($3,000 to $1,575) for a shorter period that is $64/month less.  The BOE policy may be the better option for this 34 year old mechanic as it is geared to his specific needs… if he is ever off work because of any injury or illness, his business will receive $3,000/month for up to two years so he can either:

  • Recover from the injury or illness and the business will survive
  • Restructure the business (ex. take on a partner?) for its long-term viability if he will not make a full recovery but still be able to play an active role in the business
  • Sell the business if his injury or illness is deemed long term.

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