In many small businesses, one of the partners or shareholders may drive the bulk of the revenue to the business. This does not diminish the importance of the other partners or shareholders but it can create a huge problem if that person becomes disabled.
A little known but great benefit to protect income for a business is what is known as Disability Business Overhead Expenses (BOE for short). If the business owner that drives the majority of income for the business should be incapacitated and the income will stop, a BOE plan will provide the income to pay for normal business expenses to keep the business going. This can include salaries, employee benefits, rent, utilities, interest on loans, etc. This is often not an expensive premium because the benefit period typically runs from 6 months to 2 years; the most common period is 12 months.
These payments can assist the business in paying rent and utilities and other expenses. Just because someone is disabled doesn’t mean the landlord or utility company will forgive your debt. Likewise, if you want to keep the business going, you need income flow to make that happen. The benefit period will give the business time to find a new rainmaker or complete the rest of a pre-established continuation plan. A BOE policy is a low cost, tax-deductible option to keep the lights on and the business flourishing.
Of course, this is all part of any contingency plan for any business to keep it viable. Just like a Partnership Buy-Sell Agreement that takes into account if you die and determines how and how much your heirs would be paid for share of the business, a BOE plan deals with keeping the lights while you recover.