A disabled business owner who has payroll and business expenses paid for has what kind of insurance policy?

• A. Franchise Disability
• B. Key Person
• C. Disability Income
• D. Business Overhead Expense

Answer: (D)

When a business owner becomes disabled, the policy designed to keep the business running by covering ongoing operating costs is called Business Overhead Expense insurance. This coverage reimburses the business for overhead expenses such as payroll, rent, utilities, and other fixed costs while the owner is out of work. It’s focused on keeping the business alive rather than replacing the owner’s personal income, which is why it fits the scenario where payroll and business expenses are being paid during the owner's disability.

Other options address different needs: Franchise Disability may relate to income protection tied to a franchise operation, not the general overhead; Key Person insurance protects the business from the financial impact of losing a key employee but typically pays out to the business for that loss, not for ordinary overhead; Disability Income insurance replaces the owner’s personal earnings, not the business’s overhead costs.