Conversely, the premiums of business overhead expense
policies are tax deductible to the business, but the benefits are taxable to the business when paid.
Keep in mind that business overhead expense
insurance doesn't replace the personal disability insurance you need to have--it supplements your personal coverage.
However, only one in four business owners--24 percent--has an individual disability insurance (IDI) policy, fewer than one in 10 (9 percent) of business owners have key person disability insurance, and fewer than one in 20 (4 percent) have a disability overhead expense
plan in place.
Figure 1: Per Client Cost Rise Median Overhead Expense
per Client, 2008-2010 Overhead Expense
per Client 2008 $2.197 2009 $2.287 2010 $2.431 Source: FA Insight proprietary survey data, 2011 Note: Table made from bar graph.
Other optional coverages are unique to business overhead expense
insurance (e.g., a professional replacement rider covering the cost of hiring someone to perform the insured's duties).
The addition of these solutions complements the company's portfolio of disability insurance products and solutions, which include individual disability income, DI retirement security, overhead expense
, and disability buy-out.
Many business reducing term buyers also buy overhead expense
There's been a resurgence in business overhead-expense insurance that reimburses a physician's practice for specific overhead expenses
if the business-owner physician becomes disabled.
If job supervisors spend part of their time on administration--for example, filling out daily field reports, ordering and receiving materials, and coordinating, with the contractor and/or subcontractors--this time should be estimated and included in direct job overhead expense
. If the rest of a supervisor's time is spent in direct labor, it should be included in labor costs.
A tax-deductible Business Overhead Expense
(BOE) plan from Ameritas Life could be the answer to these questions.
It is designed to cover ongoing overhead expenses
when owners are sick or hurt.
If there is no one else available to run the business (as in the case of a sole proprietor) the client might also want to consider business overhead expense