Partial or residual disability
Small business owners need to obtain a disability insurance cover not only for their employees but also for themselves. This type of protection provides income in case the individual is unable to work due to injuries or illnesses that occur away from work. In their own occupation policy, one is disabled if they can’t complete their occupation duties and any other occupations duties. This helps the individual get income until they can perform their specialized job. Partial or residual disability is defined by a loss of income and not a mere inability to perform duties.
Life insurance
The business owner’s life insurance cover replaces one’s income and protects their families in case of premature death. This cover also ensures the continuity of a business in case the owner dies.
Similarities
The holders of the policies make premium contributions repaid as compensation in case of death or disability of the holder. Both are also not a government requirement for business owners but an individual’s decision.
Differences
Life insurance is paid to the surviving beneficiaries after the death of the business owner. Disability insurance is paid to the business owner when still alive if they can’t work.
There are several types of life insurance covers; however, the main ones are term insurance or a whole life cover. A term policy covers a specified period, and compensation occurs if the insurer dies over the period if he survives nothing is paid. However, it is convertible or renewable. In a whole life policy, the insurer is paid premiums for their entire lifetime; their permanent needs are therefore covered. In disability insurance, there is either a long-term or short term coverage. The short term refers to one for a period of up to two years of disability, while longterm policy covers one for up to 65 years.
An individual can also pay for an individual disability plan or a group plan. A personal plan is more expensive in terms of the premium payables; however, the owner can underwrite the percentage of their income that the policy will replace and the number of days to wait before receiving income after disability, unlike in group policy. Life insurance is personal and has no option for group premium contributions.