Question

8 lina owns a store that sells custom clothing. mira is the sewing and alteration specialist at the store. miras contribution is significant to running the business successfully and if she is unable to work due to a disability, the business might suffer. which of the following must lina purchase to protect the business from losses in the event of miras disability?
a. individual disability insurance on miras life
b. key person disability insurance on miras life
c. business overhead expense insuranced. personal health spending plan for mira

Explanation:

To solve this, we analyze each option:

• Option a: Individual disability insurance is for personal income protection, not business losses from an employee's disability.
• Option b: Key person disability insurance protects a business from losses when a key employee (like Mira, whose role is critical) becomes disabled. This matches the scenario.
• Option c: Business overhead expense insurance covers ongoing business expenses (like rent, utilities) during a business interruption, not specifically due to a key employee's disability.
• Option d: A personal health spending plan is for Mira's personal health expenses, not for protecting the business from losses due to her disability.

Answer:

b. Key person disability insurance on Mira's life