Cover Charge

Aside from basic business insurance, other coverages to consider include life and disability insurance. These are sold separately from standard business policies and from each other.

Disability is generally more important than life insurance to a small-business owner because it will replace your income and protect your family if you are disabled and unable to run the business, explains Fairbrother.

Short-term disability insurance covers the 90-day gap between the time a person is injured or gets sick and when workers' compensation kicks in. Long-term disability usually pays benefits after 90 days or longer.

Life insurance can be totally employer-funded, totally employee-funded or a combination of the two. Typically, employers offer life insurance policies equivalent to an employee's annual salary.

The cost of disability and life insurance is influenced by the age, number and demographic makeup of you and your employees, as well as your industry. On average, disability insurance costs one-half of 1 percent of payroll, while life insurance costs about 5 cents per $1,000.

This article was originally published in the February 1996 print edition of Entrepreneur with the headline: Cover Charge.