Consultant’s Corner: Do I Need Disability Protection?

Sole Proprietor Disability Protection

Q. I own and operate a successful one-man business. I worry about the possibility that I could be unable to perform work due to accident or illness. What can I do to prepare for this scenario?

The two basic disability protection considerations for sole proprietors are personal income and keeping the business going. Other than a business cash surplus and personal savings accounts, disability insurance is the basic tool to provide financial resources—personal and business—in the event of disability.

The type and length of disabilities varies widely, which could impact your ability to provide any level of services to your customers. However, if you are totally disabled, then the basic options to keep the business operating are family (spouse, children, parents, etc.) or hiring workers.

Employees, staffing company workers, or independent contractors in your industry may be potential resources to provide the necessary skills to keep your business operating. Also, family members may work for little or no compensation or deferred compensation, but you would need financial resources to hire or engage outside workers to keep the business operating.

In addition, some disabilities may be so severe that you would need to consider selling the business rather than trying to keep it operating. To consider your business interruption concerns and the potential protection options with your business insurance agent and lawyer, you can review the following information regarding business owner disability insurance and succession planning:

Business owner disability insurance:

Disability Insurance for Business Owners

Investopedia: Disability Insurance for Business Owners

Keep Your Business Sailing Smoothly: Safeguarding Your Firm’s Course

Keeping a business operating when disabled:

How to Keep Running Your Business if You Get Sick

Business succession considerations:

SBA: Plan Your Exit

Small Business Succession Planning Strategies

Exit Strategies

Got Business Questions?

Get answers from our consultants!

Bill Wortman

Bill Wortman is the Chief Business Consultant for, with over 40 years of business experience. In addition to 12 years consulting small business owners, Bill’s professional career includes a big-eight CPA accounting firm, national consumer finance, big-three automotive manufacturing, Arby’s fast food, marketing, and other industries. He’s held multiple executive-level positions and fulfilled the role of CFO at large, publicly held (NYSE, NASDAQ, and AMEX) corporations. In addition, he’s been an owner of private ventures involving residential real estate development and a General Motors new car dealership.