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Small Business Digest


Individual Disability Insurance: Fit For A Small Business Leader

Starting with an entrepreneurial idea, small-business owners dedicate their lives to turning their visions into realities. But in their quest for success, small-business owners may overlook the importance of protecting one of their most important assets: themselves.

One out of four workers entering the workforce today will become disabled before retiring[1] — and less than 5 percent of disabling accidents are work-related.[2]

Steve Brady, second vice president of individual disability insurance sales and marketing, The Standard argues individual disability income insurance (IDI) could make all the difference for small-business owners and the future success of their companies.

As he points out, most entrepreneurs already protect their employees from on-the-job injuries by providing group long-term disability (LTD) coverage and workers’ compensation protection. What they may not realize is that as small-business owners, they also can layer an IDI policy onto their own LTD coverage — which can often provide better income protection in the case of a disabling illness or injury.

Workers’ compensation does not cover accidents and illnesses occurring off the clock. Conversely, IDI coverage provides protection to small-business owners 24 hours a day, 365 days per year. It is available to all types of small-business owners — ranging from plumbers to convenience store owners and photographers to small-scale manufacturers. 

For example, when the owner of an architecture firm was diagnosed with cancer, she had to scale back her hours and could no longer pitch prospective clients. Although her employees picked up extra work on current projects, it did not cover the income lost from missed new business opportunities. Her group LTD policy paid her full benefits for the first six months based on her loss of work time and duties, but by then her income had dropped more than 20 percent. Through her IDI coverage, she continued to receive benefits based on that loss until her income recovered.

An IDI policy also can help cover small-business owners who cannot perform the duties of their specific occupation, even if they can go back to work in a different capacity. This provides peace of mind for entrepreneurs that they — as well as their families and businesses — will be protected should they suffer a disabling illness or injury.


Selecting a policy designed for small-business owners

To select a policy that is well-tailored to their needs, small-business owners should consider the following attributes:

  • Provides a base Find a policy that offsets a loss of income in the case of a disabling injury or illness. Coverage can enable policyholders to pursue other interests, should they be unable to return to the same profession after a disability leave of absence.
  • Accounts for partial disabilities — Choose a plan that also covers partial disabilities, such as arthritis or diabetes, which occur more frequently and can impair workplace productivity. Premium IDI policies can offer full benefits for the first six months of partial disability.
  • Extends to business overhead expenses — Consider coverage that reimburses for business overhead expenses, including rent and employees’ salaries, after a disabling illness or injury.

[1]U.S. Social Security Administration, Fact Sheet February 7, 2013.
[2]Disability statistics. The Council for Disability Awareness. Available at:, Accessed on September 30, 2013.

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P.O. Box 315, Ridgefield, NJ 07657