Last reviewed October 27, 2026 by Vivek Sharma, licensed Pennsylvania insurance producer (License #719000).
When you own the business, there’s no employer plan to fall back on. Disability insurance can protect both your personal income and the business that depends on you.
Why business owners and the self-employed need coverage
If you’re self-employed or own a practice or firm, your income usually depends on your own work, and you typically don’t have employer-provided disability coverage. A serious illness or injury can stop your personal income and put the business itself at risk, while rent, payroll, loans and household bills keep coming.
Three kinds of protection
Individual disability income insurance
Replaces part of your personal income if you can’t work. Look for an own-occupation definition where available, residual benefits for partial disabilities, and a non-cancelable, guaranteed renewable contract.
Business overhead expense (BOE) insurance
Helps pay the business’s fixed operating costs, such as rent, utilities, staff salaries and equipment leases, while you recover, so there’s a business to return to. BOE policies typically pay for a shorter period than personal disability coverage, often 12 to 24 months.
Disability buy-out insurance
If you have business partners, a buy-sell agreement sets out what happens if one of you becomes permanently disabled. Disability buy-out insurance can provide the money to buy out the disabled owner’s share.
How insurers look at self-employed income
For business owners, insurers generally base coverage on earned income after business expenses, as shown on your tax returns, rather than on revenue. Because income can vary, they often look at more than one year. Keeping clean financial records makes underwriting smoother, and the right approach depends on how you’re paid: salary, distributions, or a mix.
Paying for it through the business
How premiums are paid affects how benefits are taxed. Personal disability benefits are generally received free of federal income tax when premiums are paid with after-tax dollars, while business overhead expense premiums are generally deductible as a business expense and the benefits are taxable. This is general information, not tax advice; work through the choice with your tax advisor.
How we work with business owners
Vivek Sharma, CFA, CFP®, CIPM, PhD, is an independent insurance producer licensed in Pennsylvania (License #719000). We look at your personal income, your business’s fixed costs and any partnership agreements, then compare options across insurers and explain the trade-offs in plain language.
Frequently asked questions
I’m self-employed with no group plan. Where do I start?
Start with personal disability income insurance. If you have staff or significant fixed costs, add business overhead expense coverage. We can help you decide how much of each makes sense.
My income varies a lot. Can I still get coverage?
Yes. Insurers generally look at your earned income over recent years. The amount you can buy depends on that history and on the insurer.
What’s the difference between disability insurance and business overhead expense insurance?
Disability income insurance replaces your personal income. Business overhead expense insurance pays the business’s fixed costs. Many owners carry both.
Want the details? Read how disability benefits are taxed, how much coverage you need, or the full Disability Insurance Guide.