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DisabilityIncome Insurance:What Every Small Business Owner Needs to KnowBy Andrew P. Gozinsky (Carpenter Class, 1993)No matter how much of yourself you put into your business, chances are you work for themoney as well as for the personal satisfaction of helping your clients with their various legalneeds. Your income helps meet daily expenses and, in addition, helps you save for goals,such as the down payment on a house, college tuition, and expansion of your business ora comfortable retirement.Disability income insurance is so important, precisely because so much is riding on yourability to earn your income, year in and year out. And no matter how young or healthyyou are, you are at risk of becoming disabled at some point in your life.Consider the statistics:• If you’re under age 35, chances are one in three that you will be disabled for at leastsix months during the course of your career.• Men have a 43 percent chance of becoming seriously disabled during their workingyears. Women have a 54 percent chance.• At age 42, it is four times more likely that you will become seriously disabled thandie during your working years.Speaking the lingoThe right disability policy can help you keep your household going, even if you suffer along-term disability. But before you go shopping for a DI policy, you need to know whatfeatures to look for — and the language the insurance industry uses to describe them. Thefollowing terms are part of the language describing high-quality policies, and are what youshould look for to get coverage you can count on:• Non-cancellable: To avoid the possibility of losing your coverage just when you needit most;• Guaranteed renewable: with premiums guaranteed until age 65;• Renewable for life: Although premiums may increase after age 65, your policy shouldbe conditionally renewable for life, as long as you are at work full time;• “Own Occ:” Own occupation coverage defines being “totally disabled”— and thereforeeligible for benefits — as not able to work in your own occupation even if you are atwork in some other capacity;• A choice of “riders:” Riders offer optional additional coverage such as ResidualDisability, Future Increase Option, and Cost of Living or “COLA.”To find policies that offer all these features, look for a reputable company with a history ofexperience in the DI business.Protecting your business, as well asyourselfAs a business owner, you must also protect the sourceof your income: the business you’ve worked so hard toestablish and grow. Special policies, available from thesame DI providers who offer high quality individual coverage,offer your business protection while you recoverfrom a disability.To help meet the expenses of running the office while youare disabled, consider a separate type of disability coverageknown as Business Overhead Expense or BOE. Benefitsreimburse business owners for expenses such as office rent,electricity, heat, telephone, and utilities, as well as intereston debts and lease payments on furniture and equipment.In addition, business owners who are in a partnership orhave co-owners will want to consider a policy known asDisability Buy-Out or DBO. In much the same way that lifeinsurance benefits can be set aside to fund a buy-out by theremaining partner if the other partner dies, this type of policyis designed to fund the healthy partner’s purchase of thedisabled partner’s share of the business. With the properagreement in place before disability occurs, hard feelings andthe conflicts of interest that result from a partner’sdisability can be avoided.