The need for a BOE hits home when businessowners ask themselves one very simple question — "How would my business or practice maintain its revenues and continue to pay operating expenses during a period of disability?" Other sources of funds are available, but how dependable are they really?
- Retained Earnings:
Assuming five percent of earnings are retained annually, it will take 20 years to accumulate just one year's revenues.
- Personal Disability Income Benefits:
What will be left for the person's family?
- Borrowing:
Banks lend money only to those with the ability to repay, and ability to repay is normally judged mainly by a person's income, not assets. A second mortgage on the person's home may be possible, but business or personal loans create even more debt, which must be repaid with interest.
- Spouse Working in the Business:
Unless the spouse is working in the business now, he or she may have a hard time stepping in. Questions of licensing, training, and experience aside, will the employees and other business associates accept the change?
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