You are here: For Businesses >> Overhead Expense Plans
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What Types of Expenses are Covered?
Covered expenses include those that are tax deductible to the business. The insured's salary, salaries of co-workers who perform the same duties as the insured, salaries of family members, and depreciation are typically not covered but may be via a custom policy rider.
When Do Benefits Start?
That depends on the elimination period you choose. The elimination period (time you must be totally disabled before benefits begin) will depend on several factors including: your premium budget, your type of business, your receivables history, the cash flow requirements of the business, and other underwriting factors related to your specific industry. In many cases, we see 30 day elimination periods while other businesses feel they can afford a 60 or 90 day elimination period.
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Who Receives the Expense Reimbursements from the Insurance Company?
Benefits are payable to your business and are taxable upon receipt. In as much as the benefits received are used to fund ongoing deductible business expenses, the net tax effect is neutral.
The premiums paid to the insurance company for the overhead expense policy are generally tax deductible as a business expense. How Long Are Benefits Paid?
That depends on the policy benefit option you elect. Generally speaking, the benefit duration will be either 12, 18, or 24 months. At the end of the benefit period, it is assumed you will sell your business interest under your insured buy-sell agreement funded by a separate disability buy out policy. It is further presumed you have kept your buy sell agreement up to date with the current market value of your business through annual reviews with your business advisor(s).
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