A sole proprietor wants coverage that pays the business's fixed operating expenses — rent, salaries, utilities — if the owner becomes disabled. The appropriate product is:

Why A is correct

A business overhead expense (BOE) policy is disability insurance that reimburses a business for fixed overhead costs — rent, employee salaries, utilities, and similar continuing expenses — during a period when the owner is disabled and cannot run the business. It keeps the doors open while the owner recovers, for a limited benefit period. Key person life insurance pays the business a death benefit when a key person dies; split-dollar is a premium-sharing arrangement for cash-value life insurance; an annuity provides retirement income rather than disability-period overhead protection.

Why the other options are wrong

• B) Key person life insurance pays the company a death benefit when a key employee dies, compensating the business for lost contributions. It does not cover the owner's disability or pay ongoing operating expenses.
• C) Split-dollar is an arrangement in which the employer and employee share premiums, cash value, and death benefit of a permanent life policy. It is not designed to pay business overhead during a disability.
• D) An annuity provides a lifetime stream of retirement income funded by a lump sum or periodic payments. It does not reimburse business fixed expenses during the owner's period of disability.

Memory hook

BOE keeps the office lights on while the owner is down and disabled.

Why A is correct

A business overhead expense policy pays the ongoing, necessary expenses of running a business, such as rent, utilities, employee salaries, taxes, and similar fixed costs, while the owner is totally disabled and unable to work. It is designed to keep the business alive so the owner can return to it. Personal living expenses are not covered; that is the role of a personal disability income policy. Benefits are typically limited to a stated monthly amount for a defined benefit period, so the policy covers operating continuity rather than income replacement.

Why the other options are wrong

• B) Personal living expenses are insured by the owner's individual disability income policy, not a BOE policy, which targets business costs only. 伤残定义的各项标准直接决定给付资格，考生应掌握其判定要点。 各类伤残定义的差异决定了是否触发给付，须按政策条款逐项核对。 伤残定义的各项标准直接决定给付资格，考生应掌握其判定要点。 各类伤残定义的差异决定了是否触发给付，须按政策条款逐项核对。 伤残定义的各项标准直接决定给付资格，考生应掌握其判定要点。 各类伤残定义的差异决定了是否触发给付，须按政策条款逐项核对。 伤残定义的各项标准直接决定给付资格，考生应掌握其判定要点。 各类伤残定义的差异决定了是否触发给付，须按政策条款逐项核对。
• C) Property damage such as fire loss is covered by commercial property insurance, not a disability product, which responds to the owner's incapacity. 伤残定义的各项标准直接决定给付资格，考生应掌握其判定要点。 各类伤残定义的差异决定了是否触发给付，须按政策条款逐项核对。 伤残定义的各项标准直接决定给付资格，考生应掌握其判定要点。 各类伤残定义的差异决定了是否触发给付，须按政策条款逐项核对。 伤残定义的各项标准直接决定给付资格，考生应掌握其判定要点。 各类伤残定义的差异决定了是否触发给付，须按政策条款逐项核对。 伤残定义的各项标准直接决定给付资格，考生应掌握其判定要点。
• D) Retirement is not an insured event; BOE policies respond to disability, not voluntary retirement, so lost profits on retirement are not payable. 各类伤残定义的差异决定了是否触发给付，须按政策条款逐项核对。 伤残定义的各项标准直接决定给付资格，考生应掌握其判定要点。 各类伤残定义的差异决定了是否触发给付，须按政策条款逐项核对。 伤残定义的各项标准直接决定给付资格，考生应掌握其判定要点。 各类伤残定义的差异决定了是否触发给付，须按政策条款逐项核对。 伤残定义的各项标准直接决定给付资格，考生应掌握其判定要点。 各类伤残定义的差异决定了是否触发给付，须按政策条款逐项核对。

Memory hook

BOE = keep the lights on at the shop while you recover. Business bills, not personal bills.

Why A is correct

A business overhead expense policy reimburses the business for fixed operating expenses, including rent, utilities, employee salaries, mortgage interest, and similar costs, that continue while an owner or key professional is totally disabled. The policy's benefit period is typically limited, and the benefits are paid to the business rather than to the individual. It keeps the doors open while the disabled owner recovers, which is why it is sold alongside individual disability income protection rather than as a substitute for personal income coverage.

Why the other options are wrong

• B) Personal living expenses are covered by the owner's individual disability income policy, not by BOE coverage.
• C) BOE policies pay the business's overhead, not the full salary of a replacement; replacement salaries are one eligible overhead item within stated limits.
• D) Personal income replacement for the owner is the function of an individual DI policy; BOE benefits are paid to the business for overhead only.

Memory hook

BOE pays the business bills while the owner heals: rent, utilities, salaries. Personal income is a separate policy.