Insurance Blog

4 Different Kinds of Disability Insurance

Disability insurance is designed to provide income for individuals who become sick or have an accident that prevents them from working. This article focuses on business owners and the kinds of disability insurance that are made for them.

Disability insurance for businesses includes four major types:

1. Business Overhead Insurance
   Business expenses are covered for disabled persons with this type of insurance. There are many overhead costs that business owners have to deal with every month such as rent, utilities, and employee salaries. Since a business may earn less when its owner becomes disabled, it can become difficult to handle all of these expenses. Business overhead insurance handles them for you.
2. Disability Buy/Sell Insurance
   This policy allows individuals who share ownership of a business to form buy/sell agreements if one of them files for bankruptcy, becomes disabled, or dies. The remaining owners are able to pay to purchase the disabled, bankrupt, or deceased owners share of the business by means of disability buy/sell insurance. This insurance is beneficial when there are many shared owners, since each additional owner makes the chance of bankruptcy, injury, or death more possible.
3. Wage Loss Replacement Insurance
   This kind of insurance offers the best tax benefits possible to employees and their employers if an essential employee becomes disabled. Wage loss replacement insurance can also come into play when an employee is fired or retires. When this type of individual insurance is purchased in groups they are often eligible for a multiple policy discount.
4. Life Insurance Disability Benefits
   Life insurance policies can offer income for disabled persons in the following two ways:
   
   A) Waiver of Premium
   This means that the disabled policy owner does not have to pay any premiums if they are disabled while their life insurance policy is in effect.
   
   B) Combination Policies
   The cash value of an insurance plan adds up but is tax-deferred under exempt policies.