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How do I, as a business owner, earn income security in the event of disability?

Entrepreneurs | 10 July 2020 | Written by Herman Boonen

Incapacity for work is often disastrous for a company manager. If proven unable to work due to long-term illness or accident, he risks losing up to 75% of his income. The compensation through the health insurance fund is often insufficient but can luckily be supplemented. As a business owner, you have various options to limit your loss of income through specific insurance policies.

How do I, as a business owner, earn income security in the event of disability?
Employees enjoy extra protection during the first month, because the employer is responsible for paying the wages during this period. However, business owners lack this financial safety net and immediately fall back on the health insurance fund.

This financial context is also reflected in the figures on long-term disability.
In total there are approximately 400,000 long-term sick. Only a very small proportion of these are self-employed business owners. They only represent 5% of the total number of people incapacitated for work for more than one month.

Not just more turnover…A business owner who is unable to work does not only lose turnover. He also runs the risk of structural customer loss, while the fixed costs subsist. In the worst case scenario, this could lead to forced cessation of activity.

In addition, the emotional loss of his business project plays a key factor for a business owner urging him to keep on working or to resume work as soon as possible, after an accident or during an illness.

The gross contribution from the health insurance fund is approximately 1,300 euros per month for a single person and 1,600 euros per month for a family .

Extra financial protection in case of illness or accidentNext to the statutory allowance, you as a business owner can choose to build in additional financial protection in case of illness or accident. 

There are several options for this:
 
  1. The Guaranteed Income Insurance
  2. The individual accident insurance 24h/24h
  3. Alternative: additional coverage for illness or accident through a pension insurance

1. The Guaranteed Income Insurance 
With this insurance your real income is insured in case of illness or accident.

Benefits
  • An extra income in case of disability due to illness or an accident (limited to 80% of your  professional income)
  • The amount of the premium is tax deductible.
  • The fixed monthly interest is paid from the moment of incapacity for work or from the time chosen by the manager himself (this is called the “deductible period”).
The allowance is taxed as a replacement income (at a lower tax rate than the ordinary professional income).

2. The individual accident insurance 24h/24h
With this insurance your real income is insured in case of accident, both at work and in the personal sphere.

Benefits
  • An extra income in the event of disability
  • In the event of temporary work incapacity, a self-employed person receives a daily allowance
  • In the event of permanent disability, a one-off lump sum is granted
  • On death, a lump sum is paid to the beneficiaries
  • Medical costs not covered by the Health Insurance Fund are reimbursed up to 3 years after the accident
  • The amount of the premium is not tax deductible.
The allowance is not taxed as a replacement income 

3. Alternative: additional coverage for illness or accident through a pension insurance
Cover with a Guaranteed Income Pension Insurance 
As the name implies, this insurance type is linked to a pension insurance.
The main insurance always concerns a pension accrual (Free Complementary Pension, Individual Pension Commitment or Pension Agreement).

Benefits
  • An extra income in case of disability (limited to 80% of the professional income )
  • The amount of the premium is tax deductible
  • You can choose the monthly amount yourself, from when and how much
  • A self-employed person can choose what they want cover for
  • A tailor-made tax optimization 
The allowance is taxed as a replacement income (at a lower tax rate than the normal professional income)

Because this concerns an additional cover, the premiums are lower than an equivalent cover through the ordinary guaranteed income insurance.

As a business owner you enjoy a double advantage: on the one hand build-up of a complementary pension and on the other hand a lower premium for the disability cover.

ConclusionThe financial consequences of work incapacity for a business owner may prove very serious.
In addition to the statutory allowance from the health insurance fund, it is advisable to provide additional protection against the consequences of the disability.


Would you like an analysis for your specific situation as a manager? Do you want to take a first step towards better financial protection?

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