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What is the primary purpose of a Business Overhead Expense (BOE) policy?

  1. To provide income for the business owner

  2. To cover expenses of the business when the owner is disabled

  3. To offer health benefits to employees

  4. To support marketing expenses of the business

The correct answer is: To cover expenses of the business when the owner is disabled

A Business Overhead Expense (BOE) policy is designed specifically to cover the ongoing costs of running a business in the event that the owner becomes disabled and is unable to work. When the owner is unable to generate income due to a disability, the BOE policy helps ensure that essential fixed expenses—such as rent, utilities, salaries of non-owner employees, and other necessary costs—are paid, allowing the business to maintain operations without financial strain. While providing income for the business owner is crucial, that function is typically addressed by individual disability income policies rather than a BOE policy. The focus of the BOE is on sustaining the business's daily operations during the owner’s incapacitation rather than replacing lost income for the owner themselves. Health benefits for employees are also not covered by a BOE policy; those are typically part of group health insurance plans. Support for marketing expenses is outside the scope of a BOE policy’s intended use, as it specifically targets necessary overhead costs. Thus, the primary purpose of a Business Overhead Expense policy is accurately captured in the choice that highlights it covering the expenses of the business when the owner is disabled.