Exit planning should consider the possibility that the business owner might suffer a serious disability that impacts the future operations and success of the business.
Business owners need to evaluate if they need disability insurance to protect their families and also to protect the ongoing operation and profitability of their business, should they become unable to work due to a disability.
Two types of disability insurance are:
- Disability Overhead Protection Insurance
This type of disability insurance is paid to the company to replace the cash flow impact of the owner not being able to fully work.
- Personal Disability Coverage
Beneficiaries would receive regular payments until the disabled earner can return to work.
Disability insurance can also be a valuable part of an employee's total compensation package, if fully or partially paid for by the employer.