Insurance Policies Part 2: Business

{4:18 minutes to read} In our last article, we looked at the various types of personal insurance an individual should have in order to protect their most valuable asset: themselves. In this blog, we look at the various insurance policies we should have when we are a business owner.

The leap-of-faith we took when we started our own business reminded us that life will not be the same as when we were working as an employee. As an employee, we had a steady stream of income and protection through our employer’s group policies. Now both income and insurance coverage are up to us.

Whether you operate as a one man/woman show, a corporation or a partnership, there are necessary insurance products for a business operation. We would like to introduce you to 3 of these types of insurance, the first of which is a packaged insurance that’s gaining popularity with small business owners.

Business Owner Insurance Policies

Business Owner Policy (BOP) – A BOP is a deluxe package that provides business insurance, business interruption insurance, property and liability coverage all in one policy. It can help a small business owner get a nice variety of coverages at an affordable price.

Real Life Example: A certain business owner had a retail store when Superstorm Sandy hit and it had to be closed for 2 weeks. Due to her BOP, she was able to receive cash while her business was shut down, which helped her make up for the lost revenue until she was able to reopen her store.

Business Overhead Disability Coverage – If a business owner is unable to work due to a sickness or injury, this coverage will provide dollars to help pay business expenses such as rent, administration or employee salaries until they can return to work.

Real Life Example: An accountant became ill and could no longer run his practice. He still had expenses and staff to pay. If he had gotten business overhead disability coverage, he would have received dollars to help pay those expenses.

Cash Value Life Insurance – Cash Value Life Insurance can help you create liquidity outside of the business, protection for a premature death and tax-free retirement income. This insurance is becoming more and more popular, with most insurance agents promoting it as another type of Roth IRA.

Real Life Example: Walt Disney almost went bankrupt trying to create Disneyland. No bank would lend him money, so he took a loan for $200,000 from his own whole life insurance policy. The investment certainly paid off!

Before you make any decision, please consult with a certified insurance agent. He/she will be able to discuss the plans/policies that are right for you. We have a number of agents that we work with, so feel free to reach out it you would like to be connected to one of them.

I would like to end with the words of Desiderius Erasmus: “Prevention is better than cure.” We may not have the power to prevent some of the calamities known to humans, but with proper planning, we can have some control over how these may affect us financially.

I hope you found this article useful. Please contact us and we will connect you with some of the insurance agents who serve some of our clients. Many of these agents offer a free, complimentary review of your current plans.

Nadine Riley, CPA
Founder, Masterpiece Accounting Group
Phone: (212) 966-9301
Email: info@mpagroupllc.com