Disability, and the resulting loss of income, can be a major threat to your business. Most small-business owners carry casualty insurance policies to protect their companies against unexpected events — fire and other property damage, product liability and risks stemming from officers' and directors' errors or omissions. They may also offer employees such as life and health insurance.

Sadly, many small-business owners fail to prepare for an event that could threaten the company's success and, perhaps, its very survival: the real possibility that they or key employees would have to stop working because of a permanent or long-term disability.

According to the Harvard Law School and Harvard Medical School, nearly half of all Americans filing for bankruptcy do so because of medical expenses.* Do you know what your odds are of becoming disabled? Here are some figures that may surprise you.

In order for a small company to survive an owner's or key person's disability, a disability income insurance program should be considered to:

• Protect the company from turmoil which may occur when an owner or key person is no longer able to work.
• Minimize any ill will that may occur if the company cannot compensate a disabled employee or must discontinue paying that person.

There are two basic types of disability insurance coverage — a group or an individual disability income policy or some combination.

A basic policy can provide the owner and employees with replacement of earned income loss due to disability. Most group policies have a cap on the benefit amount. Also, many cover only the base salary, not pension and profit sharing contributions, deferred compensation, commission income and incentive bonuses. Coverage under a group insurance policy generally ends when the employee leaves the company, but individual disability income insurance policies can supplement it.

An individual disability income insurance policy can provide additional income to cover financial obligations and living expenses. For the business owner, a group or individual disability income policy can also serve as a valuable employee recruitment and retention tool. In a competitive job market, a company that includes disability protection as part of its benefits package may help sway a candidate weighing two similar offers.

By protecting against unexpected events through disability income protection, a small-business owner can keep employees satisfied and secure while laying the foundation for the company's continued development.