Why is BOE important

If the owner of a business is injured, incapacitated, disabled, or severely ill then more than a personal loss of income, this might affect the overall performance of the company or business. One thing is for sure, whatever the health condition of the owner; the overhead costs will remain the same for the business or even increase. So is there a policy that can protect the business from such a situation?

Yes. The protection cover is called business overhead insurance or BOE. This insurance policy has been created in such a way that it will reimburse the business specific expenses in a situation where the owner of the business is disabled.

Statistics and reports show that almost 50% of business owners around the age of 35 suffer from some disability or the other and this can last a minimum of 90 days. A high percentage of business owners suffer from one form of disability or the other before attaining the age of 65. The truth is the disability can happen to anyone and at anytime but the company cannot shut down or the business can’t be put on the back burner. This is exactly why business overhead insurance is so important.

If and when a disability occurs, there are three situations that every business or business owner will face:

• Increase in living expenses
• Business expenses (This can remain the same or increase)
• Loss of income from the business

What are the benefits of business overhead insurance?

Business overhead insurance or BOE will reimburse the business certain or specific expenses but you need to understand that it is different from personal disability insurance. The latter will start paying benefits up to age 65 while the BOE starts reimbursing right after disability takes place.

Apart from that a business overhead insurance policy will not pay out forever. This policy has a shorter span and will reimburse for a maximum period of one to two years after the elimination or waiting period. This short span is based on the belief that businesses can’t work for more than two years if the owner is disabled and in all probabilities will shut down or go bankrupt in such a scenario.

Another important aspect of BOE is that it works well for a business that has more than one owner or has multiple owners. If a business has multiple partners then each partner can get a business overhead insurance policy to be on the safer side. One of the salient points is that the premiums paid for a business overhead insurance policy is considered to be tax-deductible and legitimate business expense. The benefits of a BOE are treated as taxable income.

Some of the expenses covered in a business overhead insurance cover include:

• Salary of employee
• Employee benefit costs
• Employment tax
• Rental payments towards business property and equipment
• Principal and interest on any mortgaged business property
• Accounting and legal fees
• Various utilities
• Miscellaneous business insurance expenses
• Interest on business debts
• General office supplies