YOUR SMALL BUSINESS IS IN JEOPARDY WITHOUT DISABILITY PLANNING

The odds of a disabling health condition that prevents you from working are greater than you might realize. According to a recent study by the Centers for Disease Control and Prevention (CDC), more than 11 million adults are unable to work due to health issues. In addition, the risk of becoming disabled triples for people between the ages of 45 to 64. If you're a small business owner and this happens to you, what will become of your business?

The answer to that question involves several issues. If you are disabled to the point of being limited in the amount of work you can do, your personal financial security is in jeopardy. You also put the business itself in jeopardy because it may not be able to continue operating without your leadership. Depending on the level of your involvement, the company's viability may be so negatively impacted by your absence that it may actually be forced to shut down.

If you do not own personal Disability insurance coverage already, obtaining such a policy should be your first step. If your work is physical in nature, Disability insurance likely seems like an obvious consideration. But even if you run your business from behind a desk, you still need to prepare for the risk of a disability.

Injuries can happen in any setting, on the job or off. Without notice you could be incapacitated by an illness or disease that knocks you out of work for an extended period of time. It is critical to protect yourself from the financial devastation associated with unforeseen events, especially as it might impact your business.

Together with purchasing a Disability policy to protect yourself and your ability to earn a living, you should also consider a Business Overhead Expense policy to help with business overhead expenses. This coverage pays for certain overhead expenses that continue after you become disabled, such as rent, taxes, insurance premiums, utility bills, and employees' compensation. By paying for these expenses while you are disabled, your business can continue its daily operations until you can return. These policies typically have elimination periods of 30 to 90 days and benefit periods of one to two years. If you become disabled, your business will receive benefits equal to the actual overhead expenses incurred during your disability period up to the policy limits.

And last but not least, you should develop a succession strategy for your business. Divide your job into the various tasks you perform. Then identify those employees that have the skills to take on additional responsibilities and assign them a set of tasks to be performed in the event of your absence. The most important part of this process is to let them practice these tasks while you are still in control of the business. Unless these employees feel comfortable with these jobs, there won't be a smooth transition of power.

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