Business Expense insurance is an indemnity style monthly payment that pays for your business expenses if you are sick or injured to a point of total and temporary (or permanent) disability.  The idea behind a Business Expenses policy is to provide a monthly limit to cover fixed monthly business expenses that are associated with your medical practice.  However it is important to know that it can be difficult to set this type of insurance up if there is more than one acting partner in the business.  The reason for this is that the insurer will argue that your practice has the capacity to continue to meet the costs associated with the business expenses even though one partner is disabled.

Premium types

Premiums are either stepped or level. Stepped premiums are comparatively cheap for the young but increase with age. This is because they are calculated on age-based mortality (death) statistics (i.e. in any one year the older the individual is the more likely they will die). Stepped premiums are good if the cover is needed for a small number of years only. Level premiums are averaged over the lifetime of the policy, in the early years the amounts paid will be greater than stepped premiums for the same year, but in the latter years the amount payable will be less.

How it works?
Business expense insurance can be owned by the business owner individually or in the business entity, whether that be a company or trust.

Taxation

As the purpose of a business expense policy is designed to cover business expenses the premiums are tax deductible and as the benefits are only paid to cover the expenses of the business it therefore negates any tax on the benefits received if the policy was to pay out.

How to apply for business expense insurance and who can set it up?

Constructing an effective insurance plan that provides cover for business expenses requires a detailed analysis of the insureds current situation and their future goals and objectives. A financial adviser can assist you with determining how much cover you may need for business expenses based on your profit and loss statement and a detailed breakdown of your practices fixed expenses.

 

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