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Business Newsletter - December 2019


2205 Point Blvd., Suite 200 | Elgin, Illinois 60123
847-741-1000 | www.lundstrominsurance.com | Fax 847-428-8857

"Serving you, your business and your community since 1956"

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Vol. 27 No. 6


Help Protect Your Business with Disability Income Insurance

While many business owners understand the need for life insurance coverage, they may overlook the potential risk associated with sustaining a serious disability. According to the most recent statistics from the Council for Disability Awareness (CDA), over 37 million Americans are classified as disabled, and more than half are between the ages of 18 and 64. How long would you be able to cover your personal and business expenses if your income and revenue were to stop suddenly due to a disability?

Consider the following example: At age 48, Don was the president and cofounder of a small, but growing, machine tool company. He thought he was in excellent health. However, one day, without warning, he suffered a minor cardiac event. Although it left no permanent damage, the follow-up surgery resulted in complications that sidelined him for the next two years. By the time Don was finally able to return to work, he had narrowly missed declaring personal bankruptcy and losing his business. Unfortunately, his retirement savings had been depleted in the process.

According to the CDA, roughly 90% of disabilities are caused by illnesses rather than by accidents. What would you do if you became unable to fully perform the duties of your job? As a business owner, you could find yourself in a dire situation.

disability insuranceThere are two important types of insurance protection that can help safeguard both a portion of your income and your business. First, disability income insurance can replace a portion of your income, should you sustain a disability. Your business may already have a group long-term disability (GLTD) plan. Most employer-sponsored GLTD plans replace a portion of an employee's salary, but monthly benefits and benefit periods may be limited. In addition, benefits from a GLTD policy are often taxable, thus reducing the amount available for disability expenses. However, you can extend your coverage by either purchasing an individual disability income insurance policy outside of your GLTD plan or participating in a group plan through a business or professional association. When purchasing a policy, pay particular attention to the way the term "disability" is defined. Some policies cover you if you are unable to work in your own occupation, while others cover you only if you are unable to work in any occupation.

Second, a business overhead expense (BOE) insurance policy can help cover business expenses and other continuing fixed costs, such as utilities, rent, and equipment leases, should you experience a
disability under the terms of the policy. In general, bene-fits are paid monthly after a predetermined waiting period, limited to a maximum amount, and restricted to a specified length of time, which often is one to two years. Therefore, if you are temporarily unable to work, which therefore affects your company's ability to generate revenue, you can rest assured that the bills will continue to be paid without interruption.

While it may be unpleasant to think about, consider what might happen to your company if you became permanently disabled. Would you be forced to sell the business below fair market value (FMV)? If you have co-owners, they may agree to continue your salary on a temporary basis, but may be unable to do so indefinitely. One way to prepare for such a situation is to establish a disability buy–sell agreement, which is a contract that specifies who will purchase the business and at what price, in the event of a disability. Through the agreement, your co-owners could use the proceeds from a disability income insurance policy to purchase your share of the business.

Help prevent a disability from derailing your business. Disability income insurance, business overhead expense insurance, and a disability buy–sell agreement are tools that can help keep your future—and your business—on track.


Operating a Business from Home—What's Covered?

The typical risks associated with a home-based business may seem less significant to a larger company, but they can have an extreme impact on the finances of a home-based business owner. Consider what might happen to your company if your computer were stolen while you were away for the weekend. Or, what if important files were destroyed when water flooded your basement during a heavy downpour, or a courier fell in your driveway while delivering a package? At the very least, these incidents may cause some financial strain, or worse, they could drive you out of business—unless, of course, you have adequate insurance coverage.home business

Many home-based business owners tend to overlook additional coverage because they believe their homeowners or renters policies will cover them in the event of a disaster or liability claim. In most cases, without the necessary coverage, owners might be in for a surprise. Homeowners policies provide limited coverage (typically around $2,500) for business equipment, which may be inadequate for high-end personal computers and printers. In addition, if someone is injured on your property during business hours, you may lack sufficient liability coverage. Also, income losses due to business interruption are not covered under a homeowners policy.

Furthermore, the existence of a business in your home may inadvertently invalidate your homeowners insurance coverage. To avoid this, it is important for you to discuss the details of the business operation with the insurance professional handling your homeowners insurance coverage.

To adequately protect a home-based business, an owner has three choices:
1) obtain endorsements, or added coverage, to an existing homeowners or renters policy; 2) buy a policy that specializes in business conducted from home; or 3) buy a policy specifically designed for small businesses. A consultation with your insurance professional can help you assess what option is best for your particular situation.

"Beefing Up" Your Homeowners Policy

Depending on the type of business you run, you may be able to increase your homeowners policy limits for business equipment and general liability for a small, additional premium. Bear in mind, however, that most homeowners policies exclude business income coverage, so you still may need a separate policy.

An In-Home Business Policy

In-home business policies, on the other hand, provide more comprehensive coverage. For instance, you can choose higher limits for business property, as well as business interruption coverage that will provide for lost income and ongoing expenses if you are unable to operate your business because of damage to your home. This is in addition to several other business-related options that are typically unavailable through a homeowners policy.

A Business Owner's Policy

Lastly, for owners with more involved operations, including manufacturing, off-site business, and commercial vehicles, a business owner's policy (BOP) may be a better fit. The BOP is a comprehensive package designed for most small businesses.

Regardless of the size and scope of your home-based business, you need insurance coverage that provides adequate protection for all your business needs. Therefore, it's always a good idea to discuss details with your insurance professional. One of our qualified insurance professionals can help you assess your situation and make an informed decision about coverage for your home-based business.


For Your Information

Promoting an Ethical Marketplace

The Better Business Bureau (BBB) is dedicated to "fostering honest relationships between businesses and consumers, instilling consumer confidence and contributing to a trustworthy marketplace for all." The BBB provides business reports, including a history of unanswered or unresolved complaints, dispute resolution, and a clearinghouse of information to promote wise purchasing decisions. For more information, visit www.bbb.org.

Information Disposal

According to the Fair and Accurate Credit Transactions Act of 2003 (FACTA), any business that uses information from consumer reports must comply with the proper disposal of sensitive information to protect against "unauthorized access to or use of the information." The standard for the proper disposal is flexible, and allows room to determine what measures are sensible based on the sensitivity of the information and the costs of different disposal methods. For more information, visit the Federal Trade Commission (FTC) online at www.ftc.gov.

IRS Video Portal

The Internal Revenue Service (IRS) offers the IRS Video Portal on its website. Once you arrive at the portal, click on the Business tab and you will find many different topics such as Business Income, Disaster Information, Forms and Retirement Plans to name a few. For instance, if you click on Retirement Plans you will find information about choosing, operating and maintaining your business' retirement plan. For more information, visit the site at www.irs.gov.


Workplace Elder Care Benefits May Improve Employee Productivity

Companies that have elder care best practices in place to assist employees with managing their caregiving responsibilities for older family members may see an improvement in engagement levels among these workers, according to a recent study, "Best Practices in Workplace Eldercare," by the National Alliance for Caregiving.elder care

Since the percentage of working caregivers is increasing due to the Baby Boomer generation, the study examined successful elder care workplace programs at 17 U.S. employers whose goals are to improve retention, productivity, and ease stress levels for those employees with caregiving responsibilities.

The report revealed that employer-sponsored programs for workers who care for aging parents, relatives, or spouses are not necessarily costly, compared to the time, expense, and loss of productivity involved with the replacement of skilled employees. Survey respondents offered a range of the following elder care workplace benefits to their employees:

  • Additional flex-time opportunities beyond paid time off (PTO), such as sick days and vacation time, to help employees with work/caregiving balance
  • An internal network of employee volunteers at all organizational levels who can provide elder care referrals and information
  • Training for management to identify and assist employees who are at risk of burnout struggling between caregiving and work responsibilities
  • Geriatric care management (GCM) services through employee assistance programs (EAPs)
  • Discounted rates for emergency backup at-home care
  • Medicare and Medicaid information
  • Help with insurance paperwork.

The study also indicated that employers who already offer elder care services as part of their benefits package need to measure the effectiveness of these programs through employee feedback. One of the most reliable gauges of successful outcomes or employee satisfaction is to conduct employee surveys. This type of follow-up can also serve to modify components or step up outreach initiatives to make more employees aware of the benefit. On the other hand, companies that are considering adding these benefits should perform a needs assessment of the workforce to determine the cost-effectiveness of establishing such a program. 

It's a Win-Win

Although employees who take advantage of these elder care programs may continue to struggle with their caregiving responsibilities, they have an opportunity to maintain their own health and emotional well-being without having to exit the workforce for any length of time and still remain productive on the job. Meanwhile, it is important that employer-sponsored elder care programs provide education to employees about the availability of program services, and train supervisors to identify workers who may benefit from using these services in order to support employees' goals of continuing to care for their loved ones. In particular, employees should be encouraged to take advantage of caregiving resources as early as possible to maximize their effectiveness.

With the reality of facing the needs of a highly skilled workforce that are caring for, or about to assume caregiving responsibilities for, their aging parents, more employers may want to manage their risk of employee turnover by considering the addition of an elder care program to both attract and retain
top talent.


Did You Know?

Compensation Information

According to a recent study from global staffing firm Robert Half, U.S. employees are putting in more work when it comes to knowing their worth. In fact, 82% of professionals feel well-informed about what they should be making and 73% say they've checked their salary against market rates, up from 54% two years ago. A majority of workers (54%) also admit to comparing compensation with coworkers. However, workers are not liking what they are finding because only 47% feel they are adequately paid.

Attitudes on Switching Jobs

Accounting Principals and Ajilon released survey results finding that despite having changed jobs in the last two years, 88.2% of respondents were open to new opportunities. Approximately 33% are actively seeking a new role. In addition, 61.2% indicated a salary boost of at least 9% would entice them to leave and 30.2% said being underpaid would most likely cause them to find a new job. Furthermore, having a bad boss is nearly as bad as non-competitive salary, with 29.6% saying a bad manager would likely cause them to find a new job.

Side Gigs Popular

Eighty-one percent of Americans who currently have a 'side gig' are interested in taking it full-time, according to recent SunTrust survey. Fifty-four percent report having a side gig to generate extra money. Top reasons for pursuing a side gig are to generate additional income for millennials (46%) and to make additional money for leisure activities for Gen Xers and Boomers (43% and 47%).

Copyright © 2019 Liberty Publishing, Inc. All rights reserved.
The content of this newsletter is taken from sources that are believed to be reliable.
However, this newsletter is not intended as a substitute for legal, financial, or professional counsel.


2205 Point Blvd. Suite 200 | Elgin, IL 60123
p 847.741.1000 | f 847.428.8857