LTD Insurance for LLC Member

Discussion in 'Disability Insurance Forum' started by JN2016, Oct 9, 2016.

  1. JN2016
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    JN2016 New Member

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    I am a sole member of an LLC in Connecticut. The LLC income varies greatly from year to year resulting in my K1 earnings to be anything from negative numbers to mid 6 digits. I would like to purchase a meaningful LTD insurance for myself (or company). Under the plans I know the benefits are calculated based on K1 earnings from the year proceeding the one in which the disability starts. In my case, this means that the benefits may be 0.
    Are there plans insuring for a fixed amount (regardless of the current income)? Alternatively, are there plans calculating benefits based on several years average? Any other possible solution? Thanks!
     
  2. scagnt83
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    scagnt83 Guru

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    Sometimes the carriers will look at a rolling average if your income varies a good bit from year to year. You are required to submit tax returns to prove your income. Depending on the amount you apply for, they will ask for anywhere from 1-3 years of tax returns.

    If traditional carriers will not insure your income, you can try Lloyds of London. They will cover a variable income when the others will not.


    As a business owner, you should look at BOE (business overhead expense) in addition to the individual disability insurance. This will cover your normal business expenses while you are not bringing in revenue.

    If you work with a good independent agent, they will talk to the underwriters and make sure they will insure you with that type of income stream BEFORE you apply for coverage.
     
    Caryn Montague likes this.
  3. JN2016
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    JN2016 New Member

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    Thanks again for your reply.

    Just a quick question about BOE insurance (business overhead expense) you have mentioned. Do you think that a fixed monthly salary of an LLC member can be a part of BOE? This would be a nice way of circumventing the K-1 requirement.
     
  4. scagnt83
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    scagnt83 Guru

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    Sorry, just saw this question. You are not able to include the salary of an LLC Member. But you could include any salaries of employees who are not a Member.
     
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