What is turnover insurance

Belgium is a country of SMEs. Many small businesses depend heavily on one person, often the manager, for their bottom line. If, due to illness or accident, this key person is unable to work, turnover is likely to drop sharply while costs remain the same. To avoid financial disaster, turnover insurance can help.

The turnover insurance covers the professional disability of the manager

Turnover insurance is a trade name for an insurance policy that covers the financial consequences of the disability of a key person in a business. If the manager can no longer perform his duties due to illness or accident, turnover insurance pays a monthly pension. This monthly payment can help to continue paying the costs, even if the turnover decreases due to the absence of the manager (s).

Turnover insurance is interesting for management companies

In Belgium, many self-employed people work in a management company. The insurance of the turnover is very useful for these companies.

In many cases, the salary the self-employed person earns from the business is only a limited part of their total compensation. For example, the business often pays several costs for the self-employed person, such as car, cell phone, laptop, etc. In some cases, the manager also lives in a house paid for by the business. All of these expenses incurred by the company supplement the manager’s income in a sense. But if the company’s turnover drops sharply, there may no longer be the financial means to continue bearing all these costs. Turnover insurance guarantees that the

Turnover insurance: the company is the holder and beneficiary of the policy

The turnover insurance is taken out by the company and not by the self-employed person in his own name. It means that :

  • the company is the policyholder, i.e. the owner of the policy
  • the monthly pension is paid to the company
  • the company can deduct the premiums from turnover insurance as a business expense

Alternative possibilities for insuring occupational disability

It is also possible to take out disability insurance as a self-employed person (and not through the company). This is called guaranteed income insurance.

  • If you are self-employed without a business, it is preferable to opt for a guaranteed income as part of your PLCI (Pension Libre Complémentaire pour Indépendant).
  • If you are working through a business, it is best to include your guaranteed income coverage in your EIP (Individual Pension Commitment).