Protecting Your Most Valuable Asset and Your Practice

Submitted by: Frenchaire Gardner

Written and Prepared by Mutual of Omaha Insurance Company

Many individuals believe one of their most valuable assets is their home or practice. While those certainly are valuable, for many of us our biggest asset is the ability to work and earn an income. Everyone who works for a living is familiar with what can happen if they lose their job. Yet the possibility of a serious disability is a risk few seem to consider. According to the Council for Disability Awareness, just over 1 in 4 of today’s 20-year-olds will become disabled before they retire.* The risk is real. The question is, “What to do about it?”

Disability income insurance is designed to replace a portion of the income you lose if you are too sick or too injured to work. That portion is roughly 66 percent of your yearly income.

Skilled individuals frequently play a crucial role in the success of a business. This is particularly true of Insurance Broker's offices in which one or two talented people possess highly specialized skills or knowledge that other employees do not have. Questions that arise are: How would the rent get paid? The lights stay on? Staff retain salaries? Replace the missing employee? Continue income into my household for expenses?

One strategy many business owners have found valuable is business overhead expense (BOE). This is a form of disability insurance specifically designed with the business owner’s needs in mind. BOE policies are designed to reimburse certain business expenses of the owner while he or she is totally disabled. Typically they are determined by the fixed expenses included in your taxes each year. This makes documentation easy and allows a business owner to make up lost funds due to tax write-offs and business expenses. The funds provided by the BOE policy help the business survive during the period of the owner’s absence due to disability. Some of the expenses typically covered by a BOE policy include rent, utilities, payments on debt, leased equipment, office supplies,

salaries of non-owners, business taxes, workers’ compensation, etc. Plans can be designed to provide a significant portion of your regular monthly income (generally 66 percent) and benefits can be timed to begin according to need.

Insurance companies use four main factors when deciding if they will take on the risk of a new policy. Those are occupation, age, health, and income. There are many ways to design a plan that is specific for your situation, and many options to choose from. As you are looking into disability plans, you will want to find a company that rates the Insurance Broker's profession favorably. Each of the four factors may have a large impact on the premiums charged, but occupation class is one you can control during the process by knowing where a company rates Insurance Broker's.

Other than paying monthly lump-sum benefits for a specific amount of time that you design, disability income policies also could continue to pay benefits during rehabilitation, job re-training and part-time employment. A survivor benefit would pay a lump-sum benefit to your beneficiary if you die during a period of disability. Optional features (riders) could be added to most disability income policies at extra cost. These include, but are not limited to, a cost-of-living adjustment to compensate for inflation, own-occupation rider to specialize skilled job definitions, and future insurability options.

Nobody wants to think about becoming disabled, but ignoring the risks could result in a catastrophe. Can you afford to miss more than two months of work without having to borrow money? Social Security may help pay disability benefits, but it could be a lengthy waiting period. You can tap into your savings, but that will exhaust most workers’ savings in about two months. Selling your assets is a last resort – but you may not get fair value for your assets and then you will have nothing.

*Social Security Administration, Disability Fact Sheet 2015


Bio: Frenchaire Gardner is a serial entrepreneur: Insurance Agent at Mutual of Omaha, Manufacturer of her business’s Be And Us LLC Nigerian Organic Shea Butter and Property Manager for her business Melchizedek LLC.  Partners with Exhales STL, Yeyo Arts Collective & The St. Louis Natural Hair & Black Culture Expo Foundation. She is a visual artist, photographer, actress and dancer. Graduated from Southern Methodist University in Dallas, Texas with a Bachelor of Arts in Psychology and a Bachelor of Arts in Sociology. Mother of Joseph Jr., Frenchaire-Two, Melchizedek Malcolm X and Sarai. Follow her on IG, Twitter and Facebook: @frenchaire, @msfrenchy06 or Frenchaire © 2018

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