Help: Disability for small business owner.


S

Steven

Hi, if anyone has experience in this area, please feel free to give
advice. Any help is appreciated.

A friend of mine, who has a S-Corp for graphic design. She's the sole
owner/employee of the business. Now she wants to get a disability
income insurance in case anything happens to her. The problem is, her
accountant was able to deduct a lot of expenses from her annual
earnings and results in a much smaller reported income; therefore,
much smaller disability coverage... She never applied for Worker's
Comp because she has no employees though she's eligible. Will Worker's
Comp provide enough extra coverage to offset the small disability
coverage? From what I know, that worker's comp is only short term and
if she's permanently disabled, it wouldn't help much. Is there any
other way she can do to help the situation?

Thanks in advance.
 
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B

Brent D. Gardner, ChFC

Steven said:
Hi, if anyone has experience in this area, please feel free to give
advice. Any help is appreciated.

A friend of mine, who has a S-Corp for graphic design. She's the sole
owner/employee of the business. Now she wants to get a disability
income insurance in case anything happens to her. The problem is, her
accountant was able to deduct a lot of expenses from her annual
earnings and results in a much smaller reported income; therefore,
much smaller disability coverage... She never applied for Worker's
Comp because she has no employees though she's eligible. Will Worker's
Comp provide enough extra coverage to offset the small disability
coverage? From what I know, that worker's comp is only short term and
if she's permanently disabled, it wouldn't help much. Is there any
other way she can do to help the situation?
Welcome to the world of self-employment!

She can purchase BOE, or Business Overhead Expense insurance, which is DI,
or Disability Income, to cover bona fide business expenses (the stuff she
deducted). This will help, and its generally convertible to regular DI, if
she needs it as her business grows.

An alternative is to seek out an agent that works for companies that are
less stringent on financial underwriting, such as Combined Insurance or
AFLAC. They can write decent coverage where other companies can't seem to
get their pants on with the zipper in the front yet.

Questions? Comments?

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.
 

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