Small businesses are a vital part of the U.S. economy. From independent professionals and local service providers to small agencies and retail businesses, more than 36 million business owners operate across the country. Small businesses are not only an important part of today’s economy, but also a key driver of its future growth. Since 1995, they have generated more than 61% of net new jobs, while more than 5.1 million new business applications were filed in 2025 alone, highlighting the ongoing strength of entrepreneurship in the United States.
Despite their diversity, many small businesses share a common characteristic: the success of the business is closely tied to the owner. For the roughly 82% of owners who operate as sole proprietors, the ability to earn an income, serve clients, and keep the business moving forward often rests with a single person. When that person is unable to work because of an illness or injury, both the owner and the business can feel the financial impact.
Many business owners recognize the importance of protection and carry health insurance, dental coverage, or other forms of coverage. Yet those solutions are designed to help cover medical expenses, not replace income if an owner is unable to work. In a recent report from Guardian Life, Big Goals, Fragile Foundations, we report that while 86% of small business owners say they feel on track to meet their financial goals, fewer than half rate their own financial management skills highly, suggesting there may be gaps in preparedness. Disability insurance can help address one of those gaps by providing income protection and helping support business continuity during an owner’s absence.
The size and diversity of the small business owner market mean that protection needs vary considerably based on an owner’s role. A solo consultant’s main exposure may be the loss of personal income, while an owner with employees faces an added risk: payroll, rent, and other fixed obligations that likely would continue even when the owner can’t work. A co-owner, on the other hand, has a further question to settle, which is what happens to the business if a partner can no longer work. Each of these risks calls for a different kind of coverage, and individual disability insurance products are designed around these distinctions.
1. Solo Professionals (Independent Practitioners)
Who they are: Solo professionals are typically self-employed or 1099 and run their businesses on their own. A CPA with an individual practice is a typical example, since the same person handles the clients, the work, and the billing. Because they personally generate the revenue, many never think of themselves as business owners.
Protection needs: Personal income protection. With no one else to carry the work, a solo professional’s income depends entirely on their own ability to perform it.
Coverage to consider: The foundation is an individual disability policy, which replaces a portion of lost income so that the CPA can continue to meet their financial obligations, like their mortgage and groceries. A CPA who runs the practice with another CPA may also want Disability Buy-Out insurance, which funds a buy-sell agreement so a disabled partner can transition out, and the remaining partner can keep the business running.
2. Small Business Owners (Operational Managers)
Who they are: Operational managers run daily operations and small teams, and they oversee payroll, inventory, and expenses. A small bakery owner fits this profile, responsible at once for the staff, the ingredients, the facilities, and the leases on ovens and other equipment. These owners carry fixed overhead costs.
Protection needs: Business continuity. Beyond their own paycheck, these owners need the business’s ongoing expenses covered so it can keep operating while they recover.
Coverage to consider: Overhead Expense coverage can pay up to 100% of routine business expenses, including rent, utilities, employee payroll, and recurring equipment payments. For a bakery, that means the lease, the staff, and the payments on ovens and mixers, so the doors stay open while the owner focuses on recovery.
3. Private Practice Owners (Licensed Professionals Who Own)
Who they are: Private practice owners are licensed professionals who own established, client-based practices. A doctor who co-owns a medical practice with a partner is a representative example. Owners like this typically hold advanced degrees or certifications, earn high incomes, and carry liability exposure. They tend to be financially aware, but they may not realize how personal and business protection work together.
Protection needs: Both personal income protection and business protection. If the individual is a co-owner, they may also consider planning what happens to the business if one partner can no longer work.
Coverage to consider: The needs of private practice owners are typically layered. An individual disability policy protects the doctor’s personal income, and Overhead Expense covers the practice’s rent, staff salaries, and recurring equipment costs. Disability Buy-Out can fund a buy-sell agreement between partners, so the doctor can sell their share to the partner or another physician and transition out with minimal disruption.
Small business owners invest years of hard work into building something of their own. But when their ability to work is central to their business’s success, protecting their income is just as important as protecting the business itself. Understanding the different types of disability insurance available is an important step toward safeguarding both.
