Business Overhead Expense Plans

You are here: For Businesses >> Overhead Expense Plans

For Businesses - Plan Menu

Employee Benefit Plans

Key Person Plans

Buy-Sell Plans

Overhead Expense Plans

Are You Risking Your Business...(Part 2)?

Would it surprise you to know that you may be your company's single greatest risk? If you are the primary income driver, what happens if you suffer a disabling illness or injury and cannot work for a while (or perhaps permanently)?

Who drives the income necessary to keep the lights on, make payroll, pay vendors, and a host of other expenses that continue even when you can't work? Business Overhead Expense Plans provide coverage for the expenses of your business while you are out. These plans give you the time you need to recover or execute your disability buy-sell agreement provisions if you cannot return to work in the future. Reassure your employees and creditors of the continuity of your business. Let us help you keep the doors open following a disabling injury or illness.

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.

Employee Wages (non-owner)
Payroll Taxes
Rent
Utilities and Phone
Equipment Leases
Building Expense
Interest Expense
Equipment Expense
Advertising
Computer Supplies
Dues & Subscriptions
Employee Benefits
Employee Retirement Plans
Office Insurance Plans
Legal & Accounting Expenses
Office Supplies Expense
Repairs & Maintenance Expense

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.

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.

Image of small conference room with meeting in progress

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).

Image of calculator, writing pen, and paper with columns of figures

Click to Learn

If you would like to learn more about buy-sell agreements and what they can do for you, your heirs, and your business. Feel free to give us a call. Or, just click the More button on the right. Our Connect area has an on-line learning center full of downloads, calculators, and more for explaining concepts you may find helpful.