How does individual disability insurance work for small-business owners?
Individual disability insurance can be particularly helpful if you are a small business owner because the monthly disability benefits you receive can be used any way you want. Since there are no restrictions, you can use your benefits to pay personal expenses or to help sustain your business. For an additional cost, you may be able to add some optional riders that were designed to give business owners an extra layer protection. Here are two that are currently available on our MyIncome Protector policies:
- Business Support Rider: With this rider, you will receive an additional benefit that you can use to help cover ongoing business expenses while you’re disabled.
- Business Loan Rider: As the name suggests, this rider is designed to help pay all, or part of, the monthly loan payments you or your business are obligated to pay on a loan.
Replaces more than just your salary
In addition to replacing a portion of your salary, individual disability insurance policies typically help replace other types of compensation. While benefits vary by policy, most generally cover bonuses, pension or profit sharing contributions, business profits, contributions on your behalf to a qualified or nonqualified retirement plan, and other payments for work or professional services.
Can be customized to meet your needs
Unlike group disability products that typically offer a pre-determined set of benefits, individual disability products often give you a greater selection of benefits. In fact, we offer three types of coverage on our MyIncome Protector policy:
- Base Coverage: To keep costs down, this option provides benefits for two years if you cannot perform the duties of your specific occupation (otherwise known as “Own Occupation” coverage.) Afterwards, the definition of disability changes to “Any Occupation” and your policy continues to pay benefits if you are unable to perform any occupation consistent with your education, training, and experience.
- Extended Own Occupation: For an additional cost, you can add a rider that expands the length of time that you will be eligible to receive benefits if you are unable to perform the substantial and material duties of your specific occupation. Once the rider is added, your policy will provide “Own Occupation” coverage for the full benefit period identified in your policy.
- True Own Occupation: By adding this rider, you will be eligible to receive benefits if you are unable to perform the substantial and material duties of your own occupation—even if you decide to work in an occupation that is different from the one you previously held. Despite being gainfully employed, the “own occupation” definition of disability will apply for the duration of your policy.
Riders can add extra value
One of the important features of individual disability insurance is the possibility of adding riders that customize your protection to your situation. Riders are additional features that you can add to your policy for an additional fee. There are riders that help with student loans payments, making sure your benefits keep up with inflation, and even allow you to receive benefits for a period of time after you return to work. The availability and diversity of riders depends on the company that issues your policy. Working with an insurance agent or financial advisor can help you determine what policy and corresponding riders are best for you.3
It’s yours to keep
With individual disability insurance, you own the policy so you can customize it however you like. What’s more, this coverage is portable. As long as you continue to pay your premiums, you can take this coverage with you wherever you go—even if you decide to change careers or join another company.