Business Overhead expense protection is important when Ones income comes to an abrupt halt upon experiencing a disability but your office expenses continue. The burden of carrying both personal and business expenses while disabled can be financially catastrophic. While personal disability income insurance helps pay for your personal living costs, Business Overhead Expense Insurance or BOE, is designed specifically for business and practice owners, it helps pay for overhead expenses while they are incapacitated. The benefits paid by Business Overhead Expense policies enables you to maintain the foundation of your practice either until your return or you decide to sell..
Expenses Covered by Business Overhead Insurance Include:
- Most office salaries (except for you or other doctors)
- Accounting and Legal Fees
- Mortgage interest or rent
- Business insurance premiums
- Depreciation of business owned equipment
- Professional dues
- Property Taxes
- Other normal and customary fixed expenses
Important Provisions of a Business Overhead Insurance:
Though business overhead policies are quite similar to personal policies, it is important to understand the provisional differences between the two policies and Important contractual clauses that should be included in the policies.
- Waiting Period – Shorter waiting periods are better for BOE policies. A 30-day waiting period is most common for this coverage.
- Benefit Period – Benefits stop once the office is sold or liquidated so the 12 month benefit period is often sufficient. However 18 and 24 month payouts are also available to cover long-term expense commitments.
- Renewable – Plan should be non-cancelable and guaranteed renewable just like personal policies.
- Future Increase Option (FIO) – Allows the insured to purchase additional benefits in the future without proving medical insurability. Financial insurability is required.