Adapted from content excerpted from the American Express® OPEN Small Business Network
Disability (or loss of income) insurance covers you in case you cannot work because of illness or injury. Disability policies typically insure 40 to 60 percent of your gross income. Look for insurance that covers you against an inability to perform your current occupation, since many policies may pay benefits only if you can not do any work at all.
Disability coverage is extremely important for a one-person business, since a sudden illness or injury that prevents you from working can put the survival of your company at stake. To get disability insurance, you may need to convince an insurer that your one-person business is stable, so be prepared to show a record of growth and consistent revenues through long-term contracts, certified financial statements, and other documents. In some cases, if you want to cover yourself for disability, you can also set up your company as a corporation, and cover yourself with workers' compensation.
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