Disability insurance pays a monthly benefit to you when you're disabled and can't work. But if you're a business owner, then you may also need funds to keep your business running while you're out of work. For that, you need business overhead expense insurance, also known as BOE insurance. Show
Expenses covered by business overhead insurance include important day-to-day costs like employee wages, loans, rent or a mortgage, and taxes. Notably, BOE doesn't cover your lost wages when you become disabled — you'll need your own disability insurance policy for that. Key takeaways
How does business overhead expense insurance work?As a business owner, even just a few months away may cause your company serious financial harm. When you have BOE insurance, your benefits will cover your operating expenses so your business can continue to run smoothly while you recover. Who qualifies for BOE insurance?You'll qualify for business overhead expense benefits if you can't perform the material responsibilities of your job and are under a physician's care for your disability. If you don't meet the definition of disability, then your claim may be rejected. Speak with a licensed agent at Policygenius if you have more questions. Insurers have different eligibility requirements, but typically to get BOE disability insurance, you have to:
Your policy may be renewable after you turn 65-years-old if you meet certain conditions, like continuing to work 30 hours a week. When there are multiple owners of the business, the insurer may set a cap on how many there can be in order for you to be eligible for their overhead expense policy. You may not be able to take out BOE insurance if you work from home. → Learn about disability insurance options if you're self-employed How long does BOE insurance last?Business overhead expense insurance typically has a benefit period of 12, 18, or 24 months. Some insurers may offer a 15- or 30-month coverage period. Benefit payments for business expense insurance end when you recover enough to return to work. What is the elimination period for BOE insurance?The elimination period for BOE insurance is 30, 60, or 90 days. Selecting a longer elimination period means there's a higher chance you'll recover from an injury or illness before the insurer has to pay benefits. This can save you a lot of money on your premiums. How much does business overhead insurance pay?You can choose your maximum monthly benefit amount when you take out a business overhead expense policy. Sufficient BOE insurance coverage should pay 100% of your monthly operating expenses up to your maximum monthly benefit amount. It's possible for unused benefit payment to roll over if your expenses are lower in a given month. For example, over a two-month coverage period, if your base monthly benefit is $10,000, but you only used $9,000 the first month, then your overhead expense insurance can pay up to $11,000 in expenses the next month. Some insurance companies will let you keep accumulated benefit payments by extending the coverage period. What other BOE disability insurance features are available?Your BOE insurance is guaranteed renewable, meaning that, as long as you keep paying the premiums, the insurer can't cancel or modify the terms of your policy. Some insurance companies allow you to renew your policy after age 65, but that's determined on a case-by-case basis. Your policy could also have residual disability benefits, which is coverage when you're not totally disabled. You'll receive partial benefit payments if you become disabled but can still perform your job. Business overhead expense insurance can also pay to help you recover and rehabilitate. This is called recovery benefits. But if you suffer a disability from which it's immediately evident that you won't recover — such as losing limbs, going blind or deaf, or losing your ability to speak — then you could qualify for your BOE coverage's presumptive disability benefits. You may be able to convert your business overhead insurance to an income protection disability insurance policy for yourself. You might do this if you decide to become an employee somewhere else, or if you're more concerned about living without an income than paying business expenses in the event of a disability. → Learn more about how long-term disability insurance protects your income Which business overhead expenses are covered?Business overhead expense insurance covers a range of "usual and customary" business expenses. These include the following:
What's not covered by BOE insurance?While BOE insurance covers many types of costs you'd be on the hook for when running the company, some expenses are not covered. These include:
If you need coverage for your own wages while you're disabled, you need to have an individual disability insurance policy. Talk to one of our licensed representatives at Policygenius who can set you up with a policy to protect your income (long-term disability insurance) and a policy to protect your business (business expense insurance) Note that both types of policies won't cover you if your disability was caused by some circumstances, such as fighting in a war, committing a crime, or self-inflicted harm. Is BOE insurance tax-deductible?As with other covered business expenses, your insurance premiums are generally tax-deductible. However, your overhead insurance benefits may be taxable as business income. But business expenses you pay for with your insurance benefits may be tax-deductible, just like other eligible expenses you pay for with your revenue. Talk to a tax professional to make sure. The opposite is true for income protection disability insurance, where your benefits are generally not taxed if you paid your premiums with your after-tax, or net, income. A long-term disability policy can benefit most people, since the benefits you receive can help fill in the gaps if you’re ill or unable to work. → Read more about disability insurance for small business owners Employee salaries, payroll taxes, rent and mortgage payments, utility bills,
accounting fees, and office expenses are common costs covered by BOE insurance. Your own wages and profits, or your relatives’ wages and profits if they’ve worked for you less than 60 days since your disability. Premiums are deductible, but benefit payments you receive may have income-tax consequences. Eligible expenses paid for with the benefits can be deducted as usual. You must wait 90 days after becoming disabled to receive benefit payments. Choosing a
lower elimination period usually means you’ll pay a lower premium. Which of the following would be covered by a business overhead expense policy?A Business Overhead Expense policy is designed to cover certain overhead expenses (rent, taxes, utility bills, employee's salaries etc) that continue when the business owner is disabled.
Which of the following reimburses small business owners for overhead expenses after a disability?Overhead Expense (OE) insurance reimburses a business owner for business expenses incurred during a disability. This coverage helps owners keep their businesses running when they are too sick or hurt to work.
What type of insurance is sold to small business owners that must meet overhead expenses such as rent or utilities?Business overhead expense *Business overhead expense (BOE) insurance is a unique type of policy that is sold to small business owners who must continue to meet overhead expenses such as rent, utilities, employee salaries, installment purchases, leased equipment, etc., following a disability.
What type of policy pays benefits to a policyholder covered under a hospital expense policy?COMPREHENSIVE MEDICAL EXPENSE INSURANCE - A form of Health Insurance which provides, in one policy, protection for both basic hospital expense and major medical expense coverage.
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A Business Overhead Expense policy would cover which of the following is a business owner becomes
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