Business Overhead Expense (BOE) Disability Insurance

Business overhead expense (BOE) disability insurance, also known as Business

Expense Insurance, pays the insured’s business overhead expenses if the business owner(s)

becomes disabled. A BOE policy pays a monthly benefit based on actual expenses,

not anticipated profits. It is designed for businesses that rely on a small number of

people (or one person) to produce revenue.

Coverage: The following business overhead expenses are typically covered by a BOE

disability policy:

Rent, Interest payments on some business debts, Utilities, Employees’ salaries and

payroll taxes, Postage and stationery, Equipment maintenance, Rental, lease, or

depreciation of office equipment, Taxes on the business property location, Insurance

premiums for Workers’ Compensation, employee medical and liability, Accounting

fees, Professional memberships and subscriptions.

Policies do not typically cover the salary of a temporary employee hired to do the

duties of the disabled unless a substitute salary expense or similar rider is purchased

with the policy. Income taxes and the cost of inventory are some expenses that are not

Covered.

Characteristics

Benefit Periods: BOE insurance policies have short benefit periods that do not

usually exceed two years. Elimination Periods: BOE policies typically have short

elimination periods; either 30, 60 or 90 days.  This is the amount of time from the claim,

or date of loss, until the benefits begin.

Maximum Benefits: BOE insurance policies offer a maximum monthly benefit, but

only reimburses the policy holder for actual overhead expenses incurred if they are

less than or equal to the maximum benefit. With some insurers, any unused benefit

can be applied to increase future monthly maximums or to extend the benefit period.

Taxation: BOE insurance benefits are reportable as income and the premiums are tax

deductible as a business expense.

Rates: BOE insurance rates are based on the insured’s age (at time of purchase),

occupational duties, health status, optional riders selected, benefit period, and

elimination period. Once a BOE policy is owned, coverage can not be increased

without providing evidence of medical insurability, unless a future increase option or

similar rider is purchased at time of policy issue.

Own-Occupation vs. Any-Occupation Disability Insurance

When purchasing private BOE disability insurance, you’ll find both own-occupation and any-

occupation coverage options.

Own-occupation is a more robust disability insurance product. It insures you against an inability

to complete the specific job you have. Typically, it’s more expensive than any-occupation

disability insurance.

Any-occupation disability insurance, by way of contrast, insures you only if you’re unable to

work any job you’re reasonably qualified for, even if it’s at a lower pay rate.

Let’s dive deeper into the differences between these two products.

Own-Occupation Disability Insurance

Own-occupation disability insurance, as its name suggests, covers any disability that keeps you

from performing your own current occupation. In many cases, you’re still eligible to receive

benefits even if you find another job.

There may be language in the contract stating that you have to have been working at the moment

you became disabled. But there are also policies available that cover people who become

disabled outside work if their disabilities still prevent them from performing their job duties.

Highly skilled surgeons, for example, frequently get own-occupation insurance, since their jobs

require such finely-tuned motor skills. For instance, if Grey’s Anatomy heart surgeon

extraordinaire Dr. Preston Burke, who suffered from hand tremors after surviving a gunshot

injury, had had own-occupation insurance coverage, he could have chosen to move into a

different role in the hospital and still received benefits for losing his ability to perform his

original job. He could also have chosen not to work at all and still have received benefits.

Any-Occupation Disability Insurance

Any-occupation disability insurance changes the occupational disability definition. Instead of

providing coverage if you’re unable to perform your job, this kind of insurance provides

coverage only if you’re unable to perform any job you’re reasonably qualified for.

Any-occupation insurance is a much less flexible and reliable form of

disability insurance coverage.

“Reasonably qualified” is determined by the insurance company, based on your age, education,

and experience level. And if you’re still considered “capable” of working with the disability—

even if it’s at a lower-paying job—you would likely not receive any disability benefits at all.

This means that any-occupation insurance is a much less flexible and reliable form of disability

insurance coverage. However, it’s often the only option available through an employer. Read

your benefits package carefully, since you might want to purchase additional coverage to ensure

that you’ll receive benefits if you do find yourself unable to do your work.

Let’s go back to the Dr. Burke example to see how the difference between these two insurance

coverage options play out. Because Dr. Burke was still a talented doctor who could perform

other medical services and assessments, any-occupation disability insurance wouldn’t have

covered him at all after he sustained his gunshot wound. Although he was unable to perform

delicate heart surgeries, he could have taken another job in the hospital or even a job outside the

medical field entirely. Thus, his any-occupation disability insurance wouldn’t have kicked in

unless he sustained a more incapacitating injury, rendering him unable to work at all.

The Takeaway

Disability insurance helps you replace part of your lost income if you become unable to perform

your job duties due to an illness or injury. But how you’re covered depends in large part on

whether you have own-occupation or any-occupation insurance. Own-occupation disability

insurance coverage kicks in if your disability prevents you from performing the specific

occupation you hold.

Any-occupation disability insurance coverage kicks in only if you’re found to be unable to

perform any job you’re reasonably qualified for. That’s why it’s key to know what kind of

insurance you have.

Feel you need to discuss your disability insurance options confidentially with an expert?  Contact us now and we will help you.  Call us Toll Free at 877-PLIG-123 (1-877-, or email us at info@ProtectUsBetter.com.