Best Bang For Your Insurance Buck
Ten years ago, or so, an independent owner operator was referred to me for benefits to guarantee his income if he was hurt and unable to work. He was eligible to opt for personal insurance instead of the limited coverage through Worker’s Compensation.
His personal lifestyle required he take the maximum available to him. I suggested he add Business Overhead Expense Benefit to cover the lease payment for his new vehicle. He opted to include illness benefit with the injury for a complete package, also adding health and dental (a business expense). A year or so after buying the insurance program, he was diagnosed with cancer. His doctor suggested he would probably be off work 2 years with treatment but predicted a positive outcome. My client began treatments and the insurance company began payments for both his personal, tax free income and the expenses for his business, including the premiums for his health and dental benefits. The truck payments were made timely and in a few short months he sold the truck for its full market value. He continued with treatments and returned to work in about 2 years.
His policy had been on waiver of premium since the outset and when he resumed full time work, he resumed premium payments.
His policy “restarted” with no penalties or changes to the contract terms.
We, as business owners, use every legitimate method available to us to maximize expenses allocated to our business while minimizing those charged as personal.
When we are determining how much income replacement insurance we need, and we look at earnings, we realize we have expense obligations that if we were unable to work because we got hurt or sick, that must be paid or we will find ourselves in financial “What do we do?” trouble. Put aside a rainy-day fund to pay the expenses? For how long and how much?
What are the consequences of not having the cash to pay rent or bank loans or lease payments – Declare bankruptcy? Lose my home?
Do you know expenses that are fixed and contractual like; lease or rent payments, professional services fees (legal, accounting), business bank loans’, car, truck, and equipment, leases; business insurance premiums, administration staff and many others can be INSURED so that if you are unable to work because of an injury or accident, the payments are made timely and creditors are satisfied? If you are off work for a significant time period, this type of insurance can save you and your business from bankruptcy, forced closure or fire sale.
The premiums paid for Business Overhead Expense are an EXPENSE to the business but create a “tax free” benefit when claimed. How does that work? Business Overhead Expense benefits are taxable when claimed but paid out as expenses.
Personal Insurance that pays a monthly income to replace lost income while disabled, is tax free*. (*Tax free when paid with personal income.)
Who would use Tax Free income to pay business expenses? No one; knowingly.
A plan that pays for up to 2 years, and possibly even longer costs pennies but delivers dollars when a business owner, or self-employed entrepreneur combines personal income replacement benefits with business overhead expense benefits. Getting the largest payout for the least payment.
Every business owner wants to pay as little as necessary while getting the most from their insurance dollars. Most independent contractors want to expense to the business the maximum eligible within the tax regulations. Here is that opportunity!
Use corporate or business dollars to pay expenses, use insurance benefits the same way!
Get the Best Bang for Your Insurance Buck!
