The Policy That Pays Your Practice's Rent, Not Your Own Paycheck

#DisabilityInsurance #SmallBusinessOwner #BusinessInsurance SUBSCRIBE: https://setforlifeinsurance.com/incom... A business overhead expense policy pays a practice's rent, payroll, and equipment. It was never designed to replace the owner's own paycheck. Maxwell Schmitz, President of Yetworth Insurance Solutions, a wholesale disability brokerage his family has run for three generations out of San Rafael, California, and a past president of the International Disability Insurance Society, joins host Jamie Fleischner to explain the two disability products practice owners confuse most: an individual disability policy, which replaces the owner's own income, and a business overhead expense policy, which pays the practice's bills instead. Schmitz's own family lived the distinction in 2020, when his mother needed a lung transplant and an individual disability policy meant her salary never had to come out of the family agency's revenue. Schmitz walks through how a disability buyout for a business partnership is typically structured with a one-year elimination period rather than the 90 days common on personal policies, why that longer waiting period caps the available benefit at a domestic maximum before an excess market like Lloyd's becomes necessary, and why residual (partial) disability claims, not total disability, decide more real-world outcomes than most owners expect. In this episode: A business overhead expense policy pays a practice's rent, payroll, and equipment; an individual disability policy pays the owner's own income; owners often need both. A disability buyout for a business partnership is typically funded with a one-year elimination period, capping the domestic benefit at a maximum before an excess carrier like Lloyd's is needed. Residual, or partial, disability claims are paid based on percentage of income lost and decide more real-world claim outcomes than total disability. Disability buyout premiums are not tax deductible, but the benefit itself is paid tax free. Schmitz's own family avoided pulling his mother's salary out of the business after she needed a lung transplant, because her individual disability policy covered her income directly. CHAPTERS 0:00 Maxwell Schmitz on his family's disability policy after his mother's 2020 lung transplant 3:43 The difference between a key person policy and a business overhead expense policy 6:19 Why financial advisors avoid the disability insurance conversation with clients 13:11 Why a disability buyout usually needs a one year elimination period 16:23 What happens to a partner's ownership stake when no one funded a buyout 19:12 Lump sum versus monthly buyout payments, and matching the elimination period to a buy-sell agreement 20:43 Why disability buyout premiums are not tax deductible but the benefit is tax free 21:54 Why residual disability claims decide more outcomes than total disability, including an attorney's heart attack case 25:11 The one question every business owner should ask about a six month sabbatical 27:47 Calculating a professional's future income to show why it needs insuring 29:30 Why business overhead expense insurance beats a GoFundMe campaign