While not strictly an executive coverage, nevertheless this disability plan is an important adjunct of the business and business owner in protecting against disability. The policy provides coverage during disability for charges the insured might incur in the operation of the business.

Such expenses will not generally include salary, fees, or other remuneration for the insured, his family, or the partner, now will it cover the cost of goods. Mortgage payments may be covered, depending on the issuing company. Often the Business Overhead Expense policy, in conjunction with individual disability planning, is the reason a business owner has a business to return to.

As a rule, there are certain types of business owners that would qualify for Business Overhead Expense (BOE) plans. These include owners of closely held businesses, owners of small businesses, and professionals in their own practice.

Premiums for BOE plans are generally considered to be deductible from the gross income of the business as an ordinary and necessary expense of doing business. The corollary is, of course, that benefits are taxable when received. This tax treatment extends not only to a corporation but also to a partnership and sole proprietor. The policy must state, however, that the benefits payable are related to business overhead expenses for this tax treatment to apply.

There is no great problem with having the benefits taxable; the benefits will be matched by equal amounts of ordinary and necessary deductions for doing business which are deductible. The income received, then, is a 'wash'.

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