Do I Need Business Overhead Expense Insurance?

 

When I speak to groups about their insurance, I often mention "Holy Trinity" of insurance, which is their medical insurance, life insurance and disability insurance. The last one, disability insurance, I tell them, is just is important as the other two, because if one were to get sick or hurt and couldn’t work, the bills don’t stop coming and will need to be paid. Disability is basically paycheck insurance.

But what if you are, like me, self-employed, a 1099 employee or a business owner and don't have access to a group plan? What would happen to your business if you were unable to work?

Which is why I like to bring up Business Overhead Expense  (BOE) coverage. It’s an insurance product most people probably haven’t heard of before even though it's been around for a long time. And it definitely one of the most undersold policies out there, probably because there are agents who don’t even know about it.

Business overhead expense insurance is designed to keep things going when a disability or illness requires you to be temporarily absent. This is different from personal disability insurance, which makes payments directly to you to replace lost income if you can’t work.

If you own a business, it’s important that you understand how BOE works so you can decide if it’s something you need.

BOE is a type of insurance that pays benefits to your business if you’re unable to work. For example, if you’re in a car accident and are seriously injured, or you’re diagnosed with a serious illness, your policy’s benefits could kick in to provide the business with cash flow while you recover.

This type of insurance is typically used to help manage your business’s day-to-day expenses. It helps your business continue as usual even when you can’t be there.

What BOE Insurance Covers

BOE is business-specific, meaning it applies to expenses related directly to running your business. The types of expenses you can use business overhead expense insurance to pay include:

• Rent or lease payments
• Loan payments
• Insurance premiums
• Utility bills
• Custodial services
• Payroll for employees
• Tax obligations
• Business credit card bills

There are, however, some things that overhead expense insurance is not designed to cover. For instance, these policies don’t extend to expenses related to improving or expanding your business, such as buying new equipment or opening a second location.

Overhead expense insurance also doesn’t cover your salary. That’s why you would need an individual policy on yourself.

It’s worth considering purchasing this type of insurance if you’re the person who’s primarily in charge of running your business. Having an overhead expense insurance policy in place means the bills continue to get paid for the business when a disability or illness puts you on the sidelines.

Depending on the terms of your policy, your insurance company could pay benefits for up to two years after you file an eligible claim. That can be helpful if you have a serious disability, illness or injury that requires extensive rehabilitation or physical therapy.

Keep in mind that not every business owner may qualify for this type of insurance. If you’re self-employed as a freelancer and run a business from home, for example, you may not be able to purchase a policy. You may have to stick with a regular personal disability insurance policy instead.

There are advantages associated with having this kind of insurance for your business.

Here are some of the key benefits of BOE insurance:

• Your business can remain open even when you can’t be there to run it
• Essential business expenses can be paid for using policy benefits, allowing you to preserve your business’s cash reserves
• Being able to meet payroll means you have a better chance of retaining key employees
• A BOE policy decreases the odds of having to dip into personal savings to cover business spending
• Premiums paid for coverage may be tax-deductible
• Business expenses paid with premiums may also be tax-deductible

In terms of the downsides, here are a few things to keep in mind:

• Policies don’t pay benefits to you directly so you’ll still need separate disability coverage for that
• Benefits typically have a time limit of 2 years and can’t be paid indefinitely
• Any benefits you receive may be considered taxable income for the business
• Policies may enforce a maximum monthly benefit limit, which may be less than what you need to continue operations

As you can see, the pros generally outweigh the cons but they still need to be factored in. And you also have to consider the potential return on investment for purchasing this kind of coverage. Having it can be a safety net if you get sick or become disabled but if you never end up using your coverage, you may feel as if you’ve paid premiums for nothing.

The key advantage to having a BOE is that it gives you time to make a decision if you are disabled. You probably won’t know when or if you’ll recover, or if you should shut down the business, sell it or keep it open. That 2 year benefit window gives you time to figure it all out.

If this is something you think you need, drop by our website and make an appointment to have an agent call you. Or you can leave a question on our contact form. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!

How Do The Self-Employed Get Benefits?

I am very comfortable working in the group benefits market. Helping people who work for large companies, school systems and municipalities has been part of my world for nearly 20 years now, and making sure they have the right benefits is a task I welcome.

At the same time, I focus the majority of my efforts toward those people who don't have a large corporate employer. As a 1099 contract employee, I realize that it is up to me to find my own affordable benefits that will help me and my family in the event I should get sick or hurt, or worse, die. That is why I enjoy helping other business owners, entrepreneurs, sales professionals and the otherwise self-employed get the coverages they need.

There are a few differences in the types of products available. Those large group products have less underwriting, and in some cases no underwriting. "Guaranteed issue" means that the insurance will cover a person with no questions (except tobacco usage). "Simplified issue" is another option, which means there may be just a few health questions. Those "knockout questions" will decide whether or not a policy gets issued. One "yes" can do you in.

But policies that are issued on a guaranteed or simplified issue basis typically take on more risk, and that risk is passed on to the employee of the group in the form of higher premiums. One of the tricks agents us when selling in the group insurance field is to quote the premium based on pay frequency. If you are paid weekly, $10 each week sounds a lot better than $45 each month. 

For the rest of us, having to find coverages that aren't deducted from our checks can be overwhelming and daunting. It doesn't have to be that way though. Use a couple of our tools and watch our product videos to see what is available and how these products work. 

Let's look at a few of these insurance products.

• Life insurance. We suggest that you take a look at affordable term life insurance while you're working, but maybe also get a small permanent policy for final expenses. For our younger clients we offer a term life insurance policy that will carry them out to age 65! And there is no medical exam* for policies under $250,000. 
• Individual Disability insurance. This should be called "paycheck insurance", because that is the purpose of this policy. When trying to determine how much coverage you should apply for, I suggest the "H.U.G." method by figuring out much monthly expenditures are for housing, utilities and groceries. (Note: individual disability policies generally don't cover maternity unless the doctor deems it necessary during the pregnancy.)
• Business Overhead Expense insurance. This is another version of the previously mentioned Disability insurance, but the benefits cover the bills of your business, not your personal bills. If you rent an office, have utility and payroll expenses, this plan gives you the time to think your options over if you get sick or hurt and are not able to work. You may recover, retire or sell the business, but you won't be rushed into a decision.
• Cancer insurance. I have found that when working with large groups of employees, cancer plans are popular through word of mouth. If one employee is diagnosed the other staff members realize how expensive the out-of-pocket costs are. We have a couple of different options for cancer insurance, one being a traditional reimbursement plan, as well as a lump-sump plan. Both can cover deductibles and co-pays and offer a wellness benefit. (One of our plans also covers several other diseases as well, like meningitis and tuberculosis.)
• Cancer, heart attack and stroke insurance. These plans give you the option to choose if you want coverage for one, two or three types of illnesses.
• Accident insurance. Coverage for any type of accident, from cutting your hand and needing a few stitches to serious automobile wrecks. As long as you get some medical attention these plans pay a benefit. Great for active people or if you have kids who play sports.  

If you are interested in learning more about these products, visit our Products and Quotes page from our website. There you can run your own quote for life and disability insurance, as well as watch some short videos about some of our other products. If you have any other questions, leave us a note on our contact form or book an appointment for us to give you a no-pressure call.  In the meantime, stay healthy!

*Medical records will be requested and may result in some clients needing an exam. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks! 

My Personal Long Term Care Story Part 2

In my previous post I told the story of my aunt who spent 22 years in a nursing home after breaking her hip. Since her adult children were in no position financially to pay for her care, my parents took the reins. The financial part of her care was draining, but so was the emotional segment. Frankly speaking, my parents were burnt out.

When my aunt died, my mother called me and broke the news in a very somber voice. Knowing exactly what she was thinking I asked, "Do I hear dad in the background dancing a little jig?" Two decades of financial burden was finally off his plate.

My mother chuckled and said, "Shut up. We're supposed to be sad." She was sad at some level but at that moment she was glad that it was over. 

As I mentioned previously, soon after this I approached my parents about purchasing long term care insurance. Surely they would see the need after all they had been through, but that wasn't the case at all. In fact, my father was adamantly against the idea. "I'm not trying to make a sale, I'm trying to avoid going through all this again," I pled , but he wouldn't listen. "I don't care if you buy a policy from someone else, just get a policy!" I said.

Within a few years, my mother, who was now in her seventies, was in need of a knee replacement. At some point during or after the surgery she had a small stroke. The two week rehab became six weeks of rehab.

The stroke also triggered dementia. When she returned home, she insisted that family members, who were long dead, were at the house and she was going to serve them dinner. My father, who had refused my help in getting a long term care insurance policy was her caregiver. Over the next five years they settled in to a routine. I would drive two hours on the weekends to visit, sometimes with my own family, and sometimes not. It was all very stressful, as my father, I discovered, was a micromanager. 

My mother's health declined slowly over the years and my father wasn't doing much better. He developed a twitch in his hand and refused to discuss it. His weight dropped as he tried to manage the household, which he wasn't very good at doing, while driving my mother to her various appointments. Occasionally, he would ask me to fill in while he took care of his own medical issues. 

About five years after her stroke my mother had a health setback, which was looking pretty dire. That's when my father told my sister that "Maybe I need to look into that insurance your brother tried to talk to me about." She had to explain that it was too late, no insurance company would accept my mother's application. 

Seven months later my mother passed away. Now all of the attention was refocused on my father, who would later disclose that he had already been diagnosed with Parkinson's Disease. 

He insisted on living alone, and let it be known to anyone who would listen that he wanted to be left alone. My sister and I made attempts to help, which he only accepted when he was desperate. After a series of falls we intervened, saying that he needed to either go to a facility or have someone stay with him. He settled on a home health agency which was approximately double the cost of a facility. 

When I asked him how he could afford the home health care, he said that he still had the rental income from the properties my mother had inherited, along with his pension. Unfortunately, he also had more expenses and debt that he didn't let us know about. To make up the difference, he was dipping into his home equity line. We didn't know about that part of his finances until his death earlier this year. 

One of my regrets is that I was never able to convince my father that there was value in long term care insurance. Friends and family, who still acknowledge that he was very "difficult" man, try to tell me that I did my best, but as an agent, I failed in my job. 

Nowadays, we have long term care policies, life insurance policies with "living benefits", and short term home health care policies, which would have helped my parents immensely, if they had been open to the idea. If you don't want to be a burden to your family, take a serious look into these options. 

With Covid taking it's toll in facilities, home health care is more important now than ever. If you have a family member in your care, take precautions, wear a mask and wash your hands, like we've been told. Please be safe and enjoy your holidays with your loved ones so you can enjoy them next year as well. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks! 

My Personal Long Term Care Story Part 1

When I speak to groups about long term care I usually start off by asking the audience to raise their hand if they know of someone who is either receiving care or has received long term care. Of course, every hand goes up. Each participant has a story about a parent, grandparent or other family member who has been in a facility or had home care at some time. 

Since it's Long Term Care Awareness Month I thought I would share a personal story. In 1979 my aunt, who was already having mobility issues, fell down and broke her hip. My mother's oldest sister by 20 years, my aunt was moved to a nursing facility. Her adult children were in no position to pay for a nursing home, so it fell on my parents to help out.

My aunt had inherited a rental property when my grandmother had died a few years earlier, but the rent was not enough to cover her bills. At the time, long term care insurance had not been developed yet, so the cost of her care would have to come out of someone's pockets. 

After some thought and negotiations, her rental property was put in a trust, with my father as the trustee and the beneficiary. Any shortages would be the responsibility of my parents, who were in their 50's at the time. Statistically, people who have broken a hip usually survive on average around 3-5 years. If and when my aunt would pass away, my parents would inherit her rental property. 

Years came and went. The five year mark, then the ten year mark. My father renegotiated the leases as they expired to keep up with the cost of his sister-in-law's care. More years went by, and my aunt continued on in her nursing home. And as this wore on, my parents continued to age as well. Money was tight as my parents try to keep themselves and my aunt afloat. 

I was in high school when my aunt was put in the nursing home. While she was there I went to college, graduated, moved away, got married and had a child. When she passed away in 2001, my aunt had been in the nursing home for 22 years. My parents, who were now in their 70's, were financially and emotionally drained. At the time of her death, my mother and father were paying over $5000 per month out of their pockets for her care. 

After her funeral, my aunt's adult children asked about their inheritance. Apparently no one, including their mother, had bothered to mention the arrangement with the trust fund. Upset with the situation, they never spoke to my parents again.

As I was restarting my career in insurance, I tried to speak to my parents about their care. At the time, they were still eligible to purchase coverage, but being children of the depression, they deflected my pleas to look into it. 

"Don't put us (my sister and I) in the same position you were in all of those years," I begged to no avail. I lived about two hours away from my parents and my sister was about seven hours away. "What are we going to do if something happens to mom?" I asked my father. 

"I'll take care of her," he said. Sadly, his words were prophetic. 

In Part 2 of this post, I'll share what happened as my parents became chronically ill. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!

Do I Need An Out-Of-Pocket Protection Plan?

As we are in the middle of open enrollment for ACA (Obamacare) plans, we are seeing that many individuals are selecting higher deductibles, fewer copays and more out-of-pocket costs to make their health insurance premium more affordable. These out-of-pocket costs may still cause unnecessary burdens to many people. 

As a matter of fact, the number one reason for bankruptcies in the country is medical expenses, with the percentage being estimated at over 60%. In 2015 the Kaiser Family Foundation found that medical bills caused 1 million adults to declare bankruptcy. The same survey also found that 26% of Americans between the ages of 18 and 64 struggled to pay their medical bills. 

When a family member has a medical condition and has to go to the hospital, they don't need added financial burdens. Our new Out-Of-Pocket (OOP) Protection Plan* is designed to help pay some of the costs that most families will experience from higher deductible plans with fewer benefits. 

Having a policy that covers out-of-pocket expenses for hospital stays could not come at a better time. The news is filled with statistics of Covid cases on the rise, and hospitals filling their rooms. Because of this, we have had an increase in interest for plans like this. 

  This plan pays directly to the policyholder. There are no networks nor deductibles. Even filing a claim is simple. And the benefits are paid directly to you in one lump sum, not the hospital or the doctor. Plus the plan pays in addition to any other insurance and workers compensation.

The best part is that you can choose the benefit and premium. For example, you can decide what amount of benefit you would like for your daily inpatient hospital confinement benefit. Next, you decide on how much you would like for your first hospital admission benefit. Included in this is a $50 benefit for doctor office visits (2 each year). 

There are also optional benefits, like an outpatient surgery benefit (limited to 2 a year) and an emergency accident benefit (limited to 4 per year).  It even covers maternity as any other illness. Not many plans do that!

You probably would like to know how much a plan like this costs. The best way to find out is to run a  your own quote which you can do by clicking here. You can cover yourself, you and a spouse, you and your children or the entire family. 

If you are trying to save money by choosing a high deductible health insurance plan, be aware that one hospital stay can burden your family's finances. By having a policy to cover those deductibles, copays and coinsurance costs can keep you afloat when you need it most.

People don't plan on being admitted to the hospital, much less having to be confined for a week or more. Those out-of-pocket costs will definitely be there when you are released from the hospital, but what about your other bills? For those of us who are self-employed, spending days in the hospital means not working, and not working means not making money that pay our usual bills. Housing, utilities, groceries and car payments can add up quickly if you don't have the money. As I mentioned earlier, this plan pays you so you can take care of those monthly obligations. 

If you have questions about this plan or any of our other insurance plans, please leave us a note in the comments section below, or go to our website at www.SurfFinancialBrokers.com and book a phone appointment. In the meantime, please stay healthy! 

*Not available in Virginia

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!

What Makes Life Insurance Rates Different?

A few years ago I met a young woman who was married and had two young boys with a third child on the way. She was a server at a local restaurant and I was there at the request of the owner to talk to the staff about various insurance products. The server, who I will call Sue, asked me about life insurance coverage on her husband. She was very concerned because she felt her husband worked a dangerous profession and she did not want to be left with three kids to take care of on her own if something were to happen to him.

I asked Sue some basic questions like her husband's age and general health condition. "He's healthy as a horse, but stubborn as a mule, especially when it comes to life insurance," she said. "He wants to get a policy through his work, but I know we can get it cheaper elsewhere." 

She was right. Sue had done her homework and figured they needed at least $250,000 in life insurance coverage for her husband. At his age, the policy he wanted to get through the "worksite" insurance company was going to cost around $70 each month. When I ran a quote for her the same policy was less than $40 each month. 

I sat down with the two of them a few days later and presented my illustration. She knew it was a good deal and appreciated the savings I was offering. He, on the other hand, argued vehemently against it. At first I couldn't understand what his objection was. Sue was getting visibly upset with him while he acted as if I was taking advantage of him. 

After a painful hour of this I asked him what would make he want to pay close to double for the same policy. He said, "I don't want to have to worry about having that $40 in my bank account each month. I'd rather they just took it out of my paycheck!" Sue, furious at him at this point, looked at her husband incredulously. 

"So this is about convenience?" I asked. 

"Yes," he said meekly. I had heard this argument before, but Sue didn't understand it. Needless to say, I didn't get the application. The tension was palpable as I packed up my papers. Sue apologized for her husband's behavior. 

People are funny sometimes. They are willing to pay extra, and in this case nearly double, for the weirdest things. I had heard the "convenience" argument many times before, so it wasn't new to me. "If they just take it out of my pay I don't have to worry about it," has been the refrain of many people. 

So why was the price of that "convenient" policy so much higher than the one I offered? In a nutshell, it had nothing to do with convenience but everything to do with underwriting. 

You see, I spent a year selling working with the same company that was offering his payroll deducted coverage. The policy Sue's husband was wanting was "simplified issue", which means that the application just had a few health questions. No medical exam, no blood or urine specimen and probably no request for medical records. That puts a lot of risk on the insurance company, and that risk gets passed along to the consumer in the form of higher premiums.

On the other hand, if an insurance company requires a paramed exam, along with requesting medical records from the applicant's physician, that carrier's risk will drop dramatically. And with that decreased risk comes decreased premiums. 

This made sense to me years later when I worked for another insurance company and our manager called a 10-year term policy a "sucker bet". He explained it like this. "A fully underwritten life insurance policy will require an exam and medical records. If nothing shows up from there, the odds of the person dying in the first five years of the policy are extremely low. Basically, the company is collecting premium for 10 years when they are only insuring the last five years of the policy."

Underwriting can find potential risks and problems, thus weeding out those potential early claims. For example, I had a guy apply for a policy who was declined because his liver enzymes were very high. The client was surprised to hear this and I recommended he go to a doctor. Sure enough, he found out he needed a transplant, but it was too late. He passed away a few months later.

As for Sue and her husband, they split up not long after I met with them. She told me he was too hard headed for her and has since remarried. She and her new husband have plenty of life insurance and she has peace of mind.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!

The Passing of Alex Trebek

I think most of us can agree, 2020 has been a horrible year. And to make it worse has been a series of celebrity deaths to cancer. Neal Peart, Chadwick Boseman, Eddie Van Halen and, most recently, Alex Trebek, have all succumbed to various forms of the disease. Though it may have been a surprise to the public when it happened, it may have been expected for them, as they had been diagnosed long before.

Cancer rarely sneaks up on someone and kills them. People usually don't feel well, so they go to the doctor and get diagnosed. Boseman had been diagnosed four years before passing away in August. Neal Peart had known for two years he was ill and swore his close friends to secrecy. And Van Halen had been receiving treatments off and on for nearly 20 years.

Alex Trebek was a different story though. He went public with is diagnosis of pancreatic cancer in March of 2019. He remained on television throughout it all, looking healthy and maintaining his good grace. "Jeopardy" fans knew he was sick and sent good thoughts and prayers. I was one of them.

It's important to note that he taped his last episode on October 29. That was just a week or so before he passed away. (His final episode is scheduled to air on December 25). 

What does this tell us about cancer? For one thing, it can affect anyone, regardless of status. Cancer does not care if someone is a celebrity. However, when a famous person dies of cancer, it does bring the spotlight to the disease, even when there is a pandemic of Covid going on around us. 

We also know that there are different types of cancer. Van Halen's throat cancer was treated in a much different way than Boseman's colon cancer. As patients, they received treatments like surgery, chemotherapy and radiation, but in varying degrees and doses.

Also, people handle their diagnosis differently. Some prefer to keep their illness private, revealing it only to friends and family, while others feel comfortable going public. I can fully understand both sides of it, but when a celebrity goes public with an illness, cancer or anything else, it brings attention and awareness. This can translate to funding for research into cures and treatments. 

What can you do? First and foremost, ask your doctor about screening options. Depending on your age and family history, your doctor may suggest a screening of some type. Finding cancer early can increase your odds of surviving. 

Of course, you can also purchase some sort of cancer insurance. There are a lot of options to fit your needs and budget. All of them pay you, not the doctor or the hospital, so you can use the money as you need. 

We offer traditional cancer treatment plans, that pay you based on the treatments you receive. For instance, these plans pay benefits for an initial diagnosis, hospital confinement,  surgery, prosthetics and other treatments. These plans can pay out a fairly high amount of money but remember that cancer treatments can take months or years, and you'll need to stay on top of everything like receipts and travel mileage for out-of-pocket expenses.

There are also lump sum policies that will pay one lump sum of money. Many people prefer this method as the benefit is pre-determined at the time of the application and they don't have to worry about turning in receipts for months on end. And one of our carriers who offers the lump sum option also includes free genomic testing, which can assist your caregivers in developing a treatment plan.

We also offer a combo cancer/heart attack/stroke plan, for those who are concerned about these three health issues. 

If you would like information or a quote, go to our website and set a phone appointment that works for your schedule. In the meantime, stay healthy! 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!