Employee Benefits | FJG/FYI
Integrated Solutions for Small Business Owners
Small business owners have unique needs in the case of a disability that extend far beyond replacing just their own income. Many owners have need for income protection but don’t realize how income protection plans can be integrated together for the sake of their business. Individual disability plans can be integrated to provide cost effective protection for both the business owner and the business.
Benefit Planning
Group Short Term (STD) and Long Term Disability (LTD) can help protect personal income in the event an employee or business owner becomes disabled and is unable to return to work immediately. But there are some benefit limitations. LTD is typically an employer-provided benefit and if there is a disabling event, any benefit received is therefore taxable. The LTD benefit is also typically based on salary, so if the individual also has other incentive based income, such as bonuses or commission, there may be a gap this protection. Finally, for the highly compensated executive, this gap can be widened further if the maximum monthly benefit of the LTD plan is lower than required to meet their needs. An individual Disability Insurance (DI) policy can supplement the group coverage and provide a higher level of income replacement.
Risk Management Planning
Business Overhead Expense (BOE)
insurance can help address the business
owner’s obligation to pay business expenses
if they become too sick or hurt to work.
This coverage reimburses the business
for general overhead expenses necessary
to keep the business up and running
while the insured is unable to work. This
coverage also provides benefits directly to the business so the owner can use personal
benefits for personal needs.
Succession Planning
Disability Buy-Sell insurance ensures business succession in the event the business owner suffers a more permanent, long term disability. The Buy-Sell Agreement is the legal document that spells out what happens in the event of retirement, death, or disability of a partner. Disability Buy- Sell insurance is used to fund the agreement in the event of a disability.
By combining, DI, BOE, and Buy-Sell insurance, a small business owner can create an integrated solution that will address their personal and business needs.