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Looking into good business disability insurance should be a top priority when starting your own business. What options are available? What should your business choose? There are a lot of types to choose from.
Types of Business Disability Insurance
There are two main types of business disability insurance and there are distinct differences between the two. Some of these differences are obvious and some are not so obvious. For specific questions concerning your business disability insurance, contact the insurance agent in charge of your other business insurance policies.
* Short-term business disability insurance, STD, covers just what the name says. Short-term disability. This business disability insurance has at least a two week waiting period and usually has a benefit period of 13-26 weeks. Short-term business disability insurance will also cover up to 100% of your income, depending on the type of policy that you select.
* Long-term business disability insurance, LDI, also covers what its name suggests, long-term disability. There is a longer waiting period with LDI vs. STD, usually 30-180 days, but short term disability will usually cover the gap during the waiting period. The benefit period is also longer with LDI. The typical benefit span is 5 years, but can be extended up to retirement age. LDI pays up to 70% of your pre-tax income. There are also 3 types of LDI.
* Own Occupation covers your income from the job you were performing when you became disabled, even if you have another type of job.
* Regular Occupation covers your income in the job you have at the time of disability. You cannot be forced to take another position, and you get 100% of your income. If it is your choice to work in another position, your benefit will be adjusted accordingly.
* Any occupation only comes to play when you cannot work at any job at all. This type is very strict and doesn't typically come into play until you have been on Regular Occupational disability for at least 5 years.
Determine Your Personal Needs
When researching your options for business disability insurance, consider and figure out exactly how much income your business will need to continue if you become disabled. For most businesses, a long term policy is the most important policy to get. You could probably survive a short term disability, but a long term absence from your business could mean failure.
There are many variables in business disability insurance policies. The first step to the right coverage is to get your budget together. Find out what you would need in order for your business to continue operating and what you can afford to pay for your business disability insurance. Carefully choose the policy that will cover your needs and stay in your budget. Your business is the livelihood of you and your employees. If you become disabled due to accident or injury, make sure your business is protected from failure. Sometimes we get ourselves into the state of mind that we have to cut expenses, and that business disability insurance is an unnecessary luxury and nothing could be further from the truth. It must be deemed a necessity and treated as such.
