Small Business
and Self-Employed Business Owners Help Center
A 10 Step Guide to Successful Small Business Management
Print out the Step-by-step Checklist
Make your business run better and more profitably
Table of Contents
Ten Building Blocks
to Success:
1. Starting a Business
2. Financing a business
3. Company Name
4. Office Equipment
5. Hiring
6. Business Insurance
7. Advertising
8. Efficiency
9. Pension Plans
10. Succession Plans
Checklist for Success
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Buy, Sell, Valuation
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Disability Insurance
Disability Insurance replaces your income when you can't work due to accident or sickness. If you do NOT have Worker's Compensation the you'll need a Disability Policy and a Medical Insurance Policy.
So you're asking yourself:
Why should I purchase a
disability policy?
How do I get paid?
What are the features of a disability insurance policy?
What factors determine cost?
Am I eligible to purchase a policy?
Where is the best place to buy a policy?
(a) Why should you
purchase Disability Insurance Policy?
Your most
valuable personal asset is your ability to earn a living. You
protect your home, car, boat
and valuables
but you hesitate to insure your most valuable asset. Why? Without a
disability policy
your income
stops when you become disabled. Do you have enough savings to cover a
long period
without a
paycheck? OK, so what are the odds of becoming disabled? These are
facts:
Fact #1: Every year 12% of the adult work force suffers a disability.
Fact #2: One in seven workers will suffer a disability that lasts five or more years.
Fact #3: At least 50% of those age 35 or over will suffer
a disability that last at least three months.
That's 90 days or more without a paycheck. Would you be able to pay your
bills if that were you?
Fact #4: While 3% of all home foreclosures are due to
death, 48% are due to disability! No
money for the mortgage means eventual foreclosure.
Fact #5: The #1 type of disability claim is due to impairment of the back or spine.
(b) How do you get
paid?
A disability insurance policy pays you when you can not perform your
job, due to either an accident
or a sickness.
(c) What are the
features of a disability insurance policy?
(1) Monthly benefit - How much you'll receive each month that
you're disabled.
(2) Waiting period (also called Elimination period) - How long
you must wait, once a disability
begins before you can collect. Waiting period can be 30, 60, 90, 180 or
365 days. The longer
the waiting period the lower the premium.
(3) Benefit Period - How long you can collect, once benefits are
paid. Benefit periods can be
2-years, 5-years, 10-years, and to age 65. The longer the benefit period
the higher the
premium.
(4) Residual (Partial) Disability - Pays you a portion of the
total disability benefit if you can
work part time but not full time.
(5) Cost of Living (COLA) - Increases your monthly benefit,
starting in the second year of a total
disability. The increase is based on the government Cost of Living
statistics. COLA can be
capped at either 3% or 6%.
(6) Future Increase Option - This is an option to purchase
additional insurance, at sometime in
the future, when your income is higher. Since the company can only ask
income questions, and
NOT ask medical questions, you are insuring your health. This option can
be purchased for an
an amount up to $5,000 in additional coverage.
(7) Automatic Benefit Increase - Automatically increases your
monthly benefit each year with
the increase calculated at 3% of the current monthly benefit. This is an
excellent way to increase
coverage without doing anything. The company does it for you!
(d) What factors
determine the cost of a disability policy
Typically, the cost is a maximum of 2% to 3% of your annual salary
but there are many variables:
(1) All of the above features, which you decide on
(2) Your age
(3) Your income
(4) Your occupation
(5) Which state you live in
(6) Your health
(e) Are you eligible to
purchase a disability income policy?
based on all the factors listed above, the only way to know is to call
an insurance agent. make sure
to call an independent agent who can quote several companies and give
you the best rate.
(f) Where
is the best place to purchase a disability income policy?
There are many insurance agents online. Some are independent and some
represent only one
company. We recommend the insurance brokers at New England Disability and Life.
They
represent several
companies and will give you honest advice. You can go their website for
a free
online insurance quote at:
www.NewEnglandDisabilityandLife.com
Check the life insurance company's ratings with A.M. Best (A+ or better)
and Standard & Poors
(AA or better).
Americans With Disabilities Act - If you believe you were discriminated against and not hired due to a disability go to the ADA website for help at http://www.usdoj.gov/crt/ada/.
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