Business Overhead Expense

group insurance plans

Disability is an unforeseen and non-predictable threat facing business owners. Often, the risk of a long term disability is not provided for, in spite of the fact that the probability of a disability lasting longer than 90 days prior to age 65 is greater that the probability of death. Almost 50% of all foreclosures are due to a disability and statistics show one in five Canadians will experience a long-term disability during their working years. If your business depends on your ability to generate income to help pay the bills, your absence due to a long- or short-term disability would impact the bottom line. It’s wise to consider how your absence from the business due to a disability would impact your business and make sure you’re prepared for the financial challenges ahead.


With Business Overhead Expense Disability Insurance, you can be there for your business, even when you can’t work!

This type of insurance plan is designed for principals of closely held businesses or practices and owners of small to medium size businesses. It is most vital for businesses and practices in which the owner’s/partner’s ability to generate income makes the difference between the office being open or closed for business—for example, physicians, lawyers, accountants, engineers, consultants, retail stores and others.

Business overhead expense insurance is an expense reimbursement policy that covers the fixed monthly overhead expenses required to keep a business viable until the return of the insured owner, after a period of disability. This allows business operations to continue until the insured owner either returns to work or makes a decision regarding the future of the business.

The following types of “fixed” business overhead expenses are typically covered by a Business Overhead Expense Disability policy:

  • Rent
  • Interest payments on outstanding eligible business debts
  • Salaries of non-owner, non-family employees
  • Utilities (heat, water, telephone, electricity, etc.)
  • Non-attorney employees’ salaries and payroll taxes
  • Postage and stationery
  • Equipment maintenance
  • Rental, lease, or depreciation of office equipment
  • Monthly average of taxes on the premises
  • Insurance premiums for Workers’ Compensation, Employee Medical Plans, Employee Taxes, General Liability, Professional Liability/Malpractice
  • Accounting fees
  • Professional memberships and/or subscription dues.

Premiums for Business Overhead Expense insurance policies can be written off as a business expense, however any benefit payments are considered taxable income. The payments are then used to pay business expenses that are tax deductible.

At Health Risk, we believe that the business owner should and can concentrate on recovery rather than worry about the financial stability of the business! Our 35 years of experience in specializing in Disability Insurance allows us to assist each client to navigate the Disability Insurance world and assist in selecting the best disability product solutions that will fit their own unique circumstances.

Health Risk always recommends that your Accountant play a role in the establishment of appropriate insurance programs in order to determine the proper tax implications for your Company or Business. We also recommend that your Lawyer be involved in the establishment of any legal documents necessary to the implementation of insurance program funding. 

Please contact Health Risk should you have any specific questions regarding Business Overhead Expense Plans or if you would like to receive a quotation.

DISCLAIMER: Please be advised that the information on this web site is intended to present a broad variety of general information as simply and accurately for your knowledge as we possibly can. In no event does this information form part of or apply as a legal document. Therefore, please note that rules, conditions and industry practices discussed may be changed over time.

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