Any business is exposed to a variety of risks, but a smart one takes steps to reduce its exposure. As a business owner, you may have a plan for life insurance to fund a buy-sell agreement or protect against the loss of a key person, but have you considered what might happen if you, a co-owner or key person is disabled?

Disability insurance^† is designed to ensure a continuous income stream should a key person no longer be able to work. In some ways, disability insurance is even more important than life insurance – your chances of becoming disabled for a period of time or permanently far outweigh your chance of dying prematurely.

Disabilities are on the rise.

Business disability insurance can replace income in the event of accident or illness – a more likely possibility than many of us might imagine. According to insurance industry data, there is a one-in-three chance of being disabled for a period of at least 90 days before age 65. That's eight times the risk of premature death.

Research shows severe disabilities have increased 400% over the past 25 years for people before age 65. That means roughly one in seven people will become disabled for five years or more. These statistics also include disability leave as a result of mental health issues – depression, stress or burnout.

Short – and long-term coverage.

Short-term disability insurance covers a percentage of salary should injury or illness prevent someone from working. Duration of benefits is typically six months.

Long-term disability insurance is designed to pick up where short-term disability policies leave off and will cover someone for five years, 10 years, or even longer. Ideally, the policy should provide coverage until age 65.

Enable the best decision.

• Compare "disability" definition.
  Not all disabilities may be covered under a policy, so review eligibility carefully to make sure you have the coverage you expect.

• Look for guaranteed insurability.
  If you want to add more insurance in future without medical qualification steps, this is an important feature.

• Add a cost of living adjustment option.
  Following an insurance claim, your benefits will keep pace with rising inflation.

• Review your existing policies.
  Adding a disability rider to existing business life or mortgage insurance policies can help reduce your expenses in the event of a disability.

• Cover your key people – and your overhead.
  Explore your options around key person and buy-sell insurance to sustain business operations, but don't forget disability overhead expense insurance to cover rent, salaries and utilities.