Business Reducing Term (BRT)

This affordable coverage provides disability protection for your fixed long term business obligations and can be sold separately from or in addition to Overhead Expense (OE).  The ability of this coverage being issued stand alone is exclusive to Guardian.

Why BRT for Your Business Obligations:

Taking on a business loan or a structured financial agreement is often part of a plan to build a business.  Even if you insure your short term business obligations like rent, utility, payroll, business insurances, etc, with your overhead expense policy, your business may still be at risk.  While long term business obligations can often be covered with Overhead Expense (OE), an OE policy is limited on the maximum payment duration to 12, 18 or 24 months.  If your obligation to pay exceeds that time, there may be a gap in your overall business DI coverage.  It may make sense for you to insure your fixed business obligations separately with BRT to provide better overall coverage.  Additionally, while OE may not be available for start up business, BRT may be available in those situations provided you are an insurable occupation, have a business loan tor business obligation that exceeds BRT policy minimums.

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How BRT Works:

The BRT policy is specifically designed to fund financial obligations that require periodic payments expiring at a specific time.  Up to 100% of the required payments can be issued up to the maximums noted below.  The minimum policy size is $1000 month, the minimum benefit term duration is 5 years , and the maximum is 30 years.  In no event with the benefit term exceed the term of the obligation or the insured's age 60.  The maximum issue age of a new BRT policy is age 55.

The definition of disability is a modified own occ (own occ and not working) and is conditionally renewable as long as you have the underlying loan payment you are insuring.  The benefits are assigned and paid directly to whom you owe the payments.  This combined with BOE can not exceed $55,000 month.

When applying for BRT you need to provide the tax ID of the beneficiary as well as a copy of the agreement.  The following obligations are insurable through BRT:

• Business Start-up or practice purchase loans 
  
  
• Capital improvement or expansion loans
  
  
• Other fixed-term loans that depend on the business talents of a key individual for repayment
  
  
• Employment contract guarantees
  
  
• Contract performance guarantees
  
  
• Purchase agreements
  
  
• Lease agreements

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BRT Premiums & Benefits:

The premiums you pay for a BRT policy are not deductible as a business expense.  However, in the case of a loan, the benefit payments are made directly to a designated payee and are not taxable to your business as income.  Benefits paid for an employment or performance contract would be received by the employer on a tax-exempt basis and paid out on a tax deductible basis.

Contact your tax advisor regarding the tax treatment of payments to the loss payee on the insured's behalf and attributable to benefits of the BRT contract.

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Benefit Monthly Maximums:

The benefit maximums are determined by the duration of the obligation.  Shorter obligations have higher potential monthly maximums and longer obligations have smaller monthly maximums.

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BRT is available in all states except CA, FL, GA, MT, NC, NH, NM, SC and VA

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BRT Specimen Policy AH55-A

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Policy Form AH55-A provided by The Guardian Life Insurance Company of America, New York, NY.  Product provisions and availability may vary by state.    

This website is provided for informational purposes only and should not be considered tax or legal advice. Please contact your tax or legal advisor regarding the tax treatment of the policy and policy benefits. You should consult with your own independent tax and legal advisors regarding your particular set of facts and circumstances. The information provided is not intended or written to be used, and cannot be relied upon, to avoid penalties imposed under the Internal Revenue Code or state and local tax law provisions.