When Everything You Built Is on the Line

As a financial advisor with 41 years in the business, I learned this lesson firsthand.

I'm responsible for 1,500 active client relationships, for bringing in new business, and for keeping my team employed.

After a routine medical exam — no symptoms, no warning — I received a phone call the next day telling me that I had breast cancer.

My focus took a sharp turn from taking care of my clients to fighting for my own health.

What I did have was business overhead expense, or BOE insurance, already in place. That was something I had put there long before the call ever came.

BOE insurance is an often-overlooked option for solopreneurs that covers the fixed operating costs of a business when the owner is unable to work due to disability or illness.

It's a type of temporary disability coverage that has evolved well beyond the basics to offer options that allow policyholders to increase coverage as their expenses grow, extend benefit periods, and protect a business that took decades to build.

My experience isn't universal: Policy benefits, terms and outcomes can vary. But the need to address the risk that serious health problems could appear is universal.

The client who needs it has changed.

The independent workforce has grown steadily over the past decade, and, with it, a new category of business owner who doesn't necessarily fit the traditional mold.

Many operate lean, with a laptop, a client roster, and overhead that continues whether they're working or not.

BOE insurance has traditionally been associated with owners of small- or medium-sized businesses, including physicians, dentists, and attorneys in private practice. Today's solopreneurs also include financial consultants, real estate agents, coaches, and independent advisors.

A common assumption is that working independently means being in control and having flexibility, which would inadvertently reduce the risk of a health challenge.

On the contrary, self-employed, unincorporated workers actually report higher disability rates (5.7%) than traditional wage-and-salary employees (3.8%), according to the U.S. Department of Labor.

Solopreneurs work longer hours, may keep working in spite of symptoms, and delay getting care. That means that, by the time a diagnosis arrives, a condition is often advanced.

What the policy covers has changed.

As the client profile has changed, so has the product.

BOE policies today are designed with the independent knowledge worker in mind, not simply covering basic overhead.

Consider BOE insurance as part of business continuity planning.

BOE policies have evolved well beyond covering rent and utilities, and advisors working from a traditional understanding of the product may be underselling it without realizing it.

The three provisions that matter most for today's solopreneur include:

◆ Executive replacement: This covers the cost of bringing someone in to run the business while the self-employed business owner or solo practitioner is out.

Basic BOE keeps the lights on and salaries paid, but it doesn't replace the person responsible for bringing in revenue.

Keeping the office open won't be sustainable if no one is driving the business forward.

◆ Partial disability coverage: This reimburses a portion of those expenses even when the owner can still work.

Earlier policies were built around total disability, which is the assumption that a client is either fully out or fully fine.

That isn't always the case.

For instance, a client working 20 hours a week because of a health issue still has a full month of overhead coming due.

◆ Future insurability: This allows clients to increase coverage at set intervals without going through a new round of medical underwriting.

As operating costs rise, clients who locked in coverage a few years ago may already be underinsured.

If their health has changed since they first bought the policy, and they do not have a future insurability option, the window for adding coverage could be permanently closed.

Advisors should talk about BOE insurance.

The BOE conversation has natural entry points that advisors are already present for: going independent, signing a lease, hiring a first employee, and crossing a revenue threshold.

These are moments where the product fits organically into the planning conversation.

It should be part of the checklist, not something that comes up after a crisis forces it.

The framing shifts depending on where the client is. Someone leaving a W-2 job needs to understand they're about to lose a safety net they never had to think about. No sick leave, no backup, no one to cover for them.

Someone already self-employed needs to see the actual dollar exposure: what does rent, staff, and equipment cost every month, and what happens to all of it if they're out for six months?

Advisors also need to walk clients through underwriting upfront.

Coverage is based on actual business expenses documented through P&L statements and tax returns, and clients who underestimate their overhead to save on premiums often find themselves underinsured at exactly the wrong moment.

That conversation is easier to have before the application than after the claim.

BOE insurance is built for the way people work today.

The solopreneur economy has created a client base that carries business overhead with no institutional safety net behind it.

Executive replacement, partial disability coverage, and future insurability options exist for that client — so that, when something unexpected happens, what they've built doesn't have to suffer for it.

BOE insurance has evolved from a basic continuity tool into a product built for the full complexity of running a business alone.

In my case, BOE insurance allowed me to keep my promise to take care of my clients and focus every ounce of my energy on recovery.

I hope you'll use BOE insurance to safeguard what you've built and help your clients safeguard what they've built.

Jane Schroeder, CLTC, is a senior vice president at Lenox Advisors.

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