The disability insurance market for entrepreneurs remains slim. Last week, Insurance Portal reported that only two insurers offer shareholder buyout insurance for a company. The overhead insurance market is only slightly broader: two players each offer a product. Another offers it as a rider on its regular disability insurance products.
What does overhead insurance cover? RBC Insurance sums it up in one sentence. "Ensure your business can always pay its bills," the insurer outlines as an introduction on its website section dedicated to its standalone Business Overhead Expense Insurance product.
Canada Life offers its standalone Overhead Expense Plan. On its disability products page, it compares two other coverages with overhead expense insurance: key person protection and shareholder buyout insurance. The insurer specifies that the insured must be totally disabled to qualify for the Overhead Expense Plan benefits.
Avoiding interruption
Business interruption is a key feature of insurance designed to cover business overhead expenses. Canada Life adds on its website that the Overhead Expense Plan focuses on the insured's recovery. "You keep your important staff. Ongoing expenses are covered. You avoid business interruption."
iA Financial Group offers business overhead protection as an option on its individual disability insurance products, Acci-Jet Program (accident-only insurance) and Superior Program. On its Superior Program page, iA mentions that its product is aimed, among others, at self-employed workers or entrepreneurs who wish to protect their income and continue to meet their business's operating expenses in case of disability.
Eligibility from majority
One can take out business overhead insurance from the age of 18. Canada Life and RBC Insurance set the upper age limit for taking out such a policy at 60. At iA Financial Group, the age for taking out insurance ranges from 18 to 59 years when the Business Overhead option is included in the Superior Program policy. The option can be taken out from 18 to 69 years with Acci-Jet.
Benefit periods vary between products. Canada Life offers two benefit periods: 12 months or 24 months. RBC Insurance also offers two benefit periods: 15 months or 24 months. iA Financial Group offers a single benefit period: 24 months.
Not for everyone
An important characteristic of disability insurance products is that the employment category for the standalone products of Canada Life and RBC Insurance covers only entrepreneurs who qualify between 4A and 2A overhead. A range that includes everyone from senior executives to technicians.
In the overhead option of its Superior Program, categories 1A, B, and C are also accepted. The 1A occupational category designates skilled manual workers who face no particular risks in their work. The B and C occupational categories include workers who are exposed to more dangerous risks, or whose record is not favorable enough to justify obtaining the preferred rates of the A1 category.
