Author Box
Articles Categories
All Categories
Articles Resources

Business Overhead Expense Insurance - Does It Make Sense?

July 17, 2012 | Comments: 0 | Views: 242

A Business Overhead Expense Insurance Plan (BOE) is more of a "poor man's" disability plan. It's a disability plan only covering a select few key employees (usually the business owner, practicing doctor, managing partner, or someone of extreme value to the company) and their ability to work.

As you might guess, a business that relies on a small number of key employees (or even just one) to make their business work, service clients, and/or drive sales is extremely vulnerable (financially) if one of those employees gets hurt or sick and cannot perform their work duties. A Business Overhead Expense Insurance policy will cover the ongoing operating expenses of your practice or business but be based on the disability coverage for a key employee. It ensures that the business owner does not have to use personal assets to pay for fixed business expenses if one of the key employees becomes disabled and cannot perform their work duties.

If the insured key employee does become disabled, a BOE policy pays a monthly benefit based on business overhead expenses, not anticipated profits. Part of the underwriting process involves verification of the company financial statements and employee census (plus the employee must be underwritten and insurable).

The following are some of the business overhead expenses that are covered within a BOE policy. As you'll notice, these are fixed, predictable expenses that are easily shown and verified. Some of the covered expenses include:

Rent or Mortgage Payments

Employee Salaries and Benefits

Utility Bills

Property Taxes

Accounting Fees, Legal Fees, and Professional Dues

Malpractice and Other Business Insurance Premiums

Maintenance and Janitorial Services

Depreciation

Interest on Business Debts

Office Supplies

Other Fixed Expenses that are Ordinary, Necessary, and Tax Deductible

As you'll notice, variable expenses, such as sales expenses, meals and entertainment, and marketing costs, are not covered under this type of plan. The Insurance Companies believe, and rightfully so, that these type of costs can fluctuate dramatically and are neither predictable nor fixed.

However, a Business Overhead Expense Insurance plan is an effective way to protect a business and maintain cash flow in the event of a disability to one of the partners, key employees, or owners. Essentially, as I mentioned previously, it's a "poor man's" disability plan and a great tool to protect a young and growing business. Since "Cash is King" to a small business owner this type of policy might be what keeps the company afloat in the event of a tragedy.

Spencer's an expert in filling the holes of benefit, retirement, and insurance plans for business owners, individuals, and companies.

http://www.owneronlybenefits.com

Source: EzineArticles
Was this Helpful ?

 
0
 
0
 
Rate this Article
 vote(s)
Feedback
Print
Re-Publish

Article Tags:

Business Overhead Expense Insurance

,

Key Man Disability Insurance

Auto insurance is probably one of the most expensive insurance types in Canada. An average car insurance policy in Canada costs approximately $1,200 per year and in Ontario, the largest Canadian

By: Alex Saltykov l Insurance > Car Auto l July 09, 2013 lViews: 552

Your house is often your largest investment that you need to protect via insurance. We created a list of multiple savings tips related to Home insurance and hope that these will help you to save a

By: Alex Saltykov l Insurance > Home Owners Renters l December 27, 2012 lViews: 379

Most auto insurance companies design specific car insurance policies for classic and antique cars. If you think you have a classic car and want classic car insurance, you will need to be sure that

By: Richard l Insurance > Car Auto l October 17, 2012 lViews: 570

Workers compensation costs are rising. According to a recent report by the Workers Compensation Research Institute (WCRI), indemnity costs per claim (the loss of earning capacity, payments for lost

By: Kelly C. Williams l Insurance > Workers Compensation l July 08, 2012 lViews: 220

One of the most helpful government programs out there is the SSI Disability program. A person that is legitimately disabled, and cannot work to provide an income for themselves for their family

By: Oleg Winter-Burnett l Insurance > Disability l July 04, 2012 lViews: 281

It is an unfortunate reality that sometimes terrible things happen and we are left unable to work. Although things like the disability application can seem very difficult to get through you still

By: Oleg Winter-Burnett l Insurance > Disability l July 04, 2012 lViews: 266

One of the most helpful government programs out there is the SSI Disability program. A person that is legitimately disabled, and cannot work to provide an income for themselves for their family

By: Oleg Winter-Burnettl Insurance > Disabilityl July 04, 2012 lViews: 281

It is an unfortunate reality that sometimes terrible things happen and we are left unable to work. Although things like the disability application can seem very difficult to get through you still

By: Oleg Winter-Burnettl Insurance > Disabilityl July 04, 2012 lViews: 266

If you can't work due to a medical condition, you may be eligible for disability benefits through the Social Security Administration. Before beginning the application process, there are some things

By: Suzanna Lakerl Insurance > Disabilityl June 29, 2012 lViews: 250

Life takes a toll and moves at the speed of light. Over time we focus on priorities that are more immediate than others. With certain things, since there is no immediate pain, we tend to put off

By: Butch Zemarl Insurance > Disabilityl June 27, 2012 lViews: 153

The SSI disability program or the Supplemental Security Income program is designed to help blind, aged, or disabled people who don't have the means to help themselves. The program only covers those

By: Oleg Winter-Burnettl Insurance > Disabilityl June 10, 2012 lViews: 195

Our idea of citizenship tends to focus on the rights implicit in it, but citizenship is more defined by duties than by rights. We are required to play a role, as watchdog and as advocate, which

By: Oleg Winter-Burnettl Insurance > Disabilityl June 10, 2012 lViews: 169

Discuss this Article

comments powered by Disqus