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Overhead Expense Insurance (OE)
Overhead Expense insurance is designed to reimburse your business for overhead expenses during your disability. This policy can insure up to $50,000 a month in overhead expenses. No small business can stay open long while the business owner is not generating new revenue. In a very short time, the business will either shut down, or the business will have to be sold. An overhead expense policy is made to give a business owner the ability to come back to an existing business if able. Without this coverage the owner may not have this option. What are the business overhead expenses that Berkshire will cover? Your 1120-S business tax return lists the overhead expenses that we can insure for your business. For many business owners, an OE policy is more important than a personal policy. Overhead expenses mount very quickly during a disability. If you have $20,000 a month in overhead, just six months of disability can leave you with $120,000 of debt. An overhead expense policy could easily be more important for you than a personal policy. The premiums are deductible, too. The Internal Revenue Service has ruled (Rev.Rul.55-26, 1955-2 CB 11) that premiums paid for an overhead expense disability policy are tax deductible as a business expense. While benefits received at claim would be treated as income, such income is used to pay the deductible expenses that this coverage covers. What is the difference between an overhead expense policy and a personal policy? While a personal disability policy is designed to replace your personal income, an OE policy replaces the expenses your business still incurs while you are disabled. A personal policy usually pays benefits to age 65, while an OE policy usually has a shorter elimination period, and a shorter benefit period of one or two years. The reason an overhead expense insurance policy has a shorter benefit period is simple. No small business will stay open more than two years if the owner is disabled. In that time you will either shut down, or sell the business. An overhead expense insurance policy is made to give you the time and ability to make the decision to come back to work, or to sell the business. Answer this question. How long could your business stay open if you were disabled? While you are disabled your business should be able to remain open. It cannot remain open if the overhead expenses continue and you are not there to bring income into the business. Allow us to show you how easily this liability can be protected by requesting an OE quote. *This publication is offered for the purposes of education and information only and should not be considered tax or legal advice. For information on your specific situation, please consult your legal or tax advisor. Call 888-513-2300
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| Financial Balance Group LLC is a general agency of The Guardian Life Insurance Company of America, NY, NY. Guardian Disability Insurance Brokerage is the
brokerage arm of Financial Balance Group LLC. Disability insurance agent information provided on this web site is for broker use only. For important information about the disability insurance products and insurers discussed on this page, as well as information concerning Guardian Disability Insurance Brokerage or the General Agency representing Guardian, please click here. Copyright Steven L. Crawford (General Agent). |
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