Disability insurance for self-employed founders is an individual policy you buy yourself that pays you a monthly benefit, usually around 60% of your income, if illness or injury stops you from working. Since there’s no employer plan behind you, the smart setup is a non-cancelable, own-occupation policy with a residual disability rider, plus a business overhead expense (BOE) policy if your company has rent, staff or fixed bills. Expect to pay roughly 1% to 3% of your income a year for the personal policy.

Here’s the line I want every founder to remember: your ability to earn is the asset nobody insures. I’ve watched entrepreneurs insure the laptop, the car, the office lease and the company’s general liability, then leave the one machine that actually produces the money, their own brain and body, completely uncovered. If you’re the business, a bad back, a cancer diagnosis or a burnout-driven depression isn’t just a health problem. It’s a revenue problem.

Before we get into the numbers, this short story from MassMutual shows what the decision looks like for a real self-employed professional.

Why Self-Employed People Need Disability Insurance More Than Employees

When you work for a big company, there’s usually a group long-term disability plan quietly sitting in your benefits package. The day you go out on your own, that disappears. Nobody replaces it for you. Nobody even reminds you it’s gone.

And the risk isn’t small. According to the Social Security Administration’s actuarial note, a worker who turned 20 in 2025 has about a 24% chance of becoming disabled before full retirement age. That’s roughly one in four.

A lot of founders assume Social Security Disability Insurance (SSDI) will catch them. I’d never build a plan on that. SSDI generally requires a condition expected to keep you out of work for at least 12 months, there’s a five-month waiting period before benefits start, and the definition of disability is strict. SSA says it pays only for total disability, nothing for partial or short-term disability. It’s a safety net, not an income plan for someone used to running a business.

Here’s what I’ve seen happen to people without coverage. The founder gets hurt or sick. They burn through the emergency fund in a few months. Then they start pulling from retirement accounts, then the business account, and then they’re forced to sell or shut down a company that was perfectly healthy before they got sick. The business didn’t fail. Its engine did.

If you’ve read my founder’s guide to term life insurance, you know I care about protecting the people who depend on you. Disability coverage protects the scenario that’s actually more likely for a working-age founder: you’re still here, still paying bills, but you can’t do the work.

Own-Occupation vs Any-Occupation: The Definition That Decides Your Claim

This is the single most important line in any disability policy, and most people skim right past it. The “definition of disability” decides whether you get paid at all.

• True own-occupation: You’re considered disabled if you can’t perform the material duties of your own specific occupation, even if you go work in a different field and earn money there.
• Modified own-occupation: You’re covered if you can’t do your own occupation and you’re not working in another one. Choose to work elsewhere, and benefits may stop or shrink.
• Any-occupation: You only get paid if you can’t work any job reasonably suited to your education, training and experience. This is much harder to qualify for.

Some policies blend them. For example, New York Life describes base coverage that pays under an own-occupation definition for the first two years, then switches to any-occupation, with riders available to extend own-occupation coverage.

Here’s what I’d do: for most self-employed people, own-occupation (true or modified) is worth the extra premium. Think about a founder who sells, speaks and closes deals. A stroke that affects speech might leave them able to do some kind of work, but not the work that pays their mortgage. Under an any-occupation policy, that could be a denied claim.

One more founder-specific trap: insurers classify you by what you actually do, not your title. “CEO” of a two-person roofing company who’s on the roof every day will be rated very differently from a CEO who sits in Zoom calls. Describe your real duties accurately on the application. That’s the record a claims examiner will read later.

How Much Disability Insurance Do You Need If You’re Self-Employed?

Most insurers won’t cover 100% of your income. If they did, there’d be less incentive to return to work. Carriers like Guardian describe individual policies replacing roughly 40% to 80% of earnings, with most capping around 60%.

Here’s the part self-employed people miss: insurers base that percentage on your net income after business expenses, not your revenue. Your agency might bill $400,000 a year, but if your tax return shows $150,000 of profit, that’s the number they’ll underwrite. Most carriers want to see about two years of tax returns.

A quick worked example:

• Net self-employment income: $150,000 a year ($12,500 a month)
• 60% target benefit: about $7,500 a month
• Your real monthly personal bills: mortgage, food, health insurance, debt, kids

If your household needs $9,000 a month and the policy pays $7,500, you know the gap you need to cover with savings or a spouse’s income. Do this math before you talk to an agent, not after.

Watch out for founders who pay themselves very little to “reinvest in the business.” Low reported income means a low benefit. If you’re planning to raise your salary or distributions soon, ask about a future increase option (also called a future purchase option), which lets you buy more coverage later without a new medical exam.

What Does Disability Insurance Cost for Self-Employed Founders?

The common rule of thumb from Policygenius, Guardian and Investopedia is about 1% to 3% of your annual income. On $150,000 of net income, that’s roughly $1,500 to $4,500 a year, or about $125 to $375 a month.

For a reality check, Investopedia’s sample quotes for non-cancelable, own-occupation coverage to retirement with a 90-day wait showed a healthy 45-year-old male office worker paying roughly $170 to $230 a month for a $5,000 monthly benefit. The same benefit for a manual laborer ran about $394 to $534. Your quote will be different, but the pattern holds.

What moves your price:

• Age and health: Buy younger and healthier, and you lock in a lower rate.
• Occupation class: Desk work is cheaper than physical work.
• Elimination period: A 90-day wait is common and costs less than 30 or 60 days.
• Benefit period: Coverage to age 65 or 67 costs more than a 2- or 5-year benefit.
• Definition and riders: True own-occupation, residual, cost-of-living and future increase riders all add premium.

My honest take: if your income disappearing would sink your family and your company, 2% of your income is one of the cheapest risk transfers you’ll ever buy. Cut the riders you don’t need before you cut the benefit period or the own-occupation definition.

The Policy Features That Actually Matter

Here are the features I’d ask about before signing anything:

1. Non-cancelable and guaranteed renewable. As long as you pay, the insurer can’t cancel your policy, raise your premium or change your benefits. Guaranteed renewable alone means they can’t cancel, but they can raise rates for a whole class.
2. Residual (partial) disability rider. This is huge for founders. Most disabilities don’t turn you off like a switch. You come back part-time, at reduced capacity. A residual rider pays a partial benefit based on your lost income, often once you’ve lost at least 15% to 20%. Without it, many policies pay nothing unless you’re totally disabled.
3. Elimination period you can actually survive. If you pick 90 days, you need at least three months of personal expenses in cash, and benefits are often paid monthly after that, so plan for closer to four.
4. Benefit period to age 65 or 67. Short benefit periods are cheaper, but the disabilities that wreck finances are the long ones.
5. Cost-of-living adjustment (COLA) rider. Increases benefits during a long claim so inflation doesn’t eat them.
6. Future increase option. Lets you buy more coverage as your income grows without new medical underwriting.

Business Overhead Expense Insurance: The Policy That Keeps the Lights On

Your personal disability policy pays you. It doesn’t pay your office rent, your bookkeeper or your team. That’s what business overhead expense (BOE) insurance is for.

BOE reimburses the business’s regular fixed costs while you’re disabled: rent or lease payments, utilities, salaries of employees who aren’t owners, business insurance premiums, accounting fees, equipment leases and interest on business debt. It does not pay your own salary or draw. Policies commonly offer 30-, 60- or 90-day elimination periods and 12-, 18- or 24-month benefit periods, because it’s designed as a bridge, giving you time to recover, find a replacement or sell the business in an orderly way.

Size BOE from your real fixed costs, not your revenue. If your studio has $3,000 rent, $4,000 in staff payroll and $1,000 in software, insurance and accounting, you’re looking at roughly $8,000 a month of coverage. The tax treatment above comes from IRS Publication 525 for personal policies and IRS Revenue Ruling 55-264 for overhead policies, but confirm how it applies to your entity with your CPA.

If you have co-founders or investors, BOE is only one layer. Pair it with key person insurance so the company itself has a plan if the person it’s built around can’t show up, and ask your agent about a disability buy-out policy if your operating agreement says partners must buy out a disabled owner.

How to Get Disability Insurance When You’re Self-Employed: 7 Steps

1. Pull two years of tax returns. Know your net self-employment income, because that’s what insurers underwrite.
2. Calculate your monthly personal number. What does your household need each month to stay afloat?
3. List your fixed business overhead. Rent, payroll for non-owners, leases, insurance, utilities, software and loan interest.
4. Write down your real job duties. Not your title. What you actually do each week determines your occupation class and your claim.
5. Talk to an independent disability insurance specialist. Someone who can quote multiple carriers, not one company’s captive agent.
6. Compare policies line by line. Definition of disability, non-cancelable status, residual rider, elimination period, benefit period, COLA and future increase options.
7. Apply while you’re healthy. Every new diagnosis can mean an exclusion or a higher price later. Expect medical questions and possibly an exam.

Mistakes I See Founders Make With Disability Coverage

• Assuming a group plan from a spouse or old job covers them. It usually doesn’t follow you into self-employment.
• Minimizing income on tax returns, then wanting a big benefit. You can’t have both.
• Buying any-occupation to save money without understanding it may never pay for a specialized founder.
• Skipping the residual rider. Partial disabilities are where many real claims live.
• Forgetting the business. Personal coverage won’t pay your team or your lease. That’s BOE’s job.
• Waiting until next year. Your premiums are based on your age and health on the day you apply.

I’ll leave you with this. You’ve probably spent years building the skill, reputation and drive that turn into revenue. That’s the real asset. Treat it like one, and insure it before you need to.

This article is educational and isn’t personal financial, tax, insurance or legal advice. Policy terms, pricing and tax treatment vary by carrier, state and business structure. Talk to a licensed insurance agent and a CPA about your situation before buying coverage.

Frequently Asked Questions

Can self-employed people get disability insurance?

Yes. Self-employed people can buy individual disability insurance directly from insurers. Most carriers ask for about two years of tax returns to verify net income, then offer a monthly benefit that usually replaces around 60% of that income.

How much does disability insurance cost for self-employed workers?

A common rule of thumb is 1% to 3% of annual income. Price depends on age, health, occupation, elimination period, benefit period and riders. Own-occupation coverage and shorter waiting periods cost more than any-occupation coverage and longer waits.

What is the difference between own-occupation and any-occupation disability insurance?

Own-occupation pays if you can’t perform your specific job, even if you could do other work. Any-occupation pays only if you can’t do any job suited to your education and experience, which makes claims much harder to qualify for.

What does business overhead expense insurance cover?

Business overhead expense insurance reimburses fixed business costs while the owner is disabled, such as rent, utilities, non-owner employee salaries, leases and business insurance. It doesn’t pay the owner’s salary and usually lasts 12 to 24 months.

Is disability insurance tax-deductible for self-employed people?

Personal disability premiums generally aren’t deductible, but benefits are usually tax-free if you paid premiums with after-tax dollars. Business overhead expense premiums are generally deductible, and those benefits are taxable. Confirm your situation with a CPA.

A founder equity split is how co-founders divide a startup’s ownership. Base it on what each person will contribute from here on, not on who had the idea. Then put every founder’s shares on a vesting schedule, usually four years with a one-year cliff, so nobody keeps equity they didn’t earn. An even split can work, but a 50/50 deal with no vesting, no tie-breaker and no written reasons is the most expensive handshake in startups.

I’ve watched this play out more times than I’d like. Two friends get excited at a kitchen table, shake hands on “50/50, partners for life,” and incorporate that weekend. Eighteen months later one of them is still working 70-hour weeks. The other took a job offer and kept checking in on Slack. Because nothing vested, the one who left still owns half the company. Every investor who looks at that cap table sees the problem in about 30 seconds.

Before we get into the numbers, Y Combinator’s Michael Seibel explains why your co-founder split decides who stays motivated for the long haul.

Why 50/50 Is the Most Expensive Handshake in Startups

Here’s the thing: 50/50 isn’t wrong. What’s wrong is the reason most founders choose it. They pick it to skip an uncomfortable conversation, and that conversation doesn’t go away. It comes back later, and by then there’s real money on the table.

Equal splits are getting more common. Carta’s Founder Ownership Report, built on anonymized data from more than 45,000 startups, found that 45.9% of two-founder teams split their equity equally in 2024, up from 31.5% in 2015. In its follow-up on two-founder teams, Carta reports that even when duos don’t split evenly, the median gap for 2025 companies was only 51–49.

Y Combinator has long recommended equal or near-equal splits among co-founders, on the idea that almost all the work is still ahead of you. I agree with that logic, with one condition. An equal split only stays fair if everyone keeps showing up equally. Vesting is what holds you to that.

The 50/50 handshake gets expensive in three ways:

• Deadlock. Two founders with equal votes and no tie-breaker can freeze the company on hiring, fundraising or a pivot.
• Dead equity. A founder who leaves early and keeps unvested shares owns a big piece of the company without doing any of the work. Future investors read that as risk.
• Silent resentment. When effort, risk or cash invested drift apart and the split never changes, the partnership slowly breaks down long before the company does.

Choosing a co-founder is one of the biggest decisions you’ll make, and I’m a big believer in why every successful business needs a co-founder. That’s exactly why the paperwork needs to protect the partnership, not just the friendship.

How to Split Equity Among Co-Founders: A 6-Step Decision Checklist

If I were sitting across from you and your co-founder tonight, this is the order I’d walk you through. Do it before you incorporate or issue shares, while every number is still cheap.

1. Agree on roles for the next 24 months. Who is CEO? Who builds the product? Who sells? Write each person’s job down in a single sentence.
2. Weigh future contribution, not the idea. Ideas are cheap. Execution, time and risk are expensive. A founder who brings a working prototype, a patent or key customer relationships has brought something real. A founder who just had the original thought hasn’t.
3. Price in commitment and risk. Full-time with no salary is a very different bet from nights and weekends “until we raise.” If one founder is part-time, either give them a smaller share or delay their grant until they go full-time.
4. Treat cash as cash. If one founder puts in $50,000, record it as an investment (a priced share purchase, a SAFE or a convertible note) instead of quietly bumping up their founder percentage.
5. Decide how to break ties. With an even split, name a tie-breaker: a final-say CEO on operating calls, an independent board seat, or a simple escalation rule written into your founder agreement.
6. Write down the why, then vest everyone. One paragraph that explains the reasoning behind your split will save you a fight in year two. Then put every founder, including the CEO, on the same vesting schedule.

If, after all of that, the honest answer still comes out roughly equal, then 50/50 or 51/49 is a perfectly good split. The point isn’t to avoid equal splits. The point is to earn them.

Standard Founder Vesting: 4 Years With a 1-Year Cliff

Vesting decides when you earn your shares. The split decides how many you get. Carta’s vesting guide describes the venture-backed standard: a four-year schedule with a one-year cliff, where a quarter of the shares vest after 12 months and the rest vest monthly over the next 36 months. Investors expect to see founders on this schedule.

Here’s what that looks like for a founder holding 4,000,000 shares:

After the cliff, about 83,333 shares (1/48 of the grant) vest each month. The cliff exists for one reason: if someone leaves in month seven, they walk away with nothing, and the company doesn’t carry a ghost on its cap table forever.

How founder vesting actually works: reverse vesting

Founders usually don’t get stock options. They buy their shares on day one at a tiny price, often a fraction of a cent per share, under a restricted stock purchase agreement. The company then holds a repurchase right over the unvested shares, typically at the lower of what the founder paid or fair market value, and that right shrinks month by month as the shares vest. That’s why lawyers call it “reverse vesting.” You own the shares from the start, but you can lose the unvested ones if you leave.

Many founders also negotiate vesting credit for work done before incorporation. For example, if you’ve been building for nine months, you might start with nine months already vested. That’s reasonable as long as it’s applied evenly and written into the agreement.

Single-Trigger vs Double-Trigger Acceleration

Acceleration decides what happens to your unvested shares if the company is sold. This matters because an acquirer may want to keep you, may not, or may restructure your role entirely.

Startup paperwork platforms like Clerky describe customary founder terms as four-year monthly vesting with a one-year cliff plus 100% double-trigger acceleration. Single-trigger sounds great for founders, but it can make your company harder to sell, because the buyer is paying for a team that could become fully vested and leave on closing day.

My advice: ask for 100% double-trigger acceleration, pay close attention to how “cause” and “good reason” are defined, and let your startup lawyer handle the wording.

The 83(b) Election: The 30-Day Deadline You Can’t Miss

If your founder shares are subject to vesting, talk to a tax professional about a Section 83(b) election the week you receive the shares, not the week your accountant reminds you at tax time.

Here’s the basic idea. Without an 83(b) election, you may owe ordinary income tax on the value of your shares as each batch vests, which could be painful if the company becomes valuable. With a timely 83(b) election, you choose to be taxed on the shares’ value when you receive them. For a brand-new startup, the spread between that value and what you paid is often close to zero, and your capital gains holding period generally starts right away.

The deadline is strict. The IRS instructions for Form 15620, Section 83(b) Election say the election must be filed no later than 30 days after the shares are transferred, and it generally can’t be revoked without IRS consent. Since 2025, the IRS has allowed Form 15620 to be filed online, as well as by mail. Either way, you must also give a copy to the company, and you should keep proof of filing. Miss that 30-day window and there’s generally no fix.

An 83(b) election isn’t automatically right for every situation. If the shares already have meaningful value, filing could mean paying tax up front on equity you might later forfeit. That’s exactly why this is a call for a CPA or startup tax attorney, not a blog post.

Dilution Basics: Your Split Is a Starting Point, Not a Final Number

Every founder needs to hear this: the percentage you agree on at the kitchen table is the largest stake you’ll probably ever own. Every option pool and funding round shrinks it.

Here’s a simple example for two founders who start 50/50:

That’s an illustration, not a forecast. In real deals, pools are often topped up before each round, which dilutes founders further. Carta’s data shows the same pattern at scale: the median founding team owned 56.2% after seed, 36.1% at Series A and 23% at Series B. In other words, don’t fight over 5% at formation when you’re both about to give away half the company to build it. Spend that energy on vesting and on building something worth diluting.

5 Founder Equity Mistakes I’d Avoid

1. Splitting before roles are clear. You can’t price contribution you haven’t defined.
2. No vesting “because we trust each other.” Vesting isn’t about trust. It protects whoever stays, and that could be you.
3. Handing equity to early helpers. Advisors and freelancers can get small, vesting grants or cash. Don’t make them co-founders.
4. Skipping the IP assignment. Every founder should assign the code, brand and inventions to the company. Investors check this during due diligence.
5. Ignoring what happens if a founder dies or becomes disabled. A buy-sell agreement, often funded with key person insurance, decides who buys the shares and where the money comes from, so you don’t end up running the company alongside your co-founder’s estate.

What I’d Do If I Were Splitting Equity This Week

I’d get every founder in one room with a whiteboard and no laptops. I’d go through the six-step checklist and write a short paragraph explaining the split. I’d put everyone on four-year vesting with a one-year cliff and ask for 100% double-trigger acceleration. Then I’d hire startup counsel to paper it properly, including stock purchase agreements, IP assignments and a founder agreement, and I’d put the 83(b) deadline in everyone’s calendar with a reminder at day 10.

The founders who get this right aren’t the ones who split perfectly. They’re the ones who had the hard conversation early, when it only cost them an awkward evening and not their company.

Disclaimer: This article is for educational purposes only and is not legal, tax or financial advice. Equity, vesting, acceleration and 83(b) rules depend on your entity type, jurisdiction and specific facts. Talk to qualified startup counsel and a tax professional before you issue shares or file any election.

Frequently Asked Questions

What is a fair founder equity split?

A fair founder equity split reflects each co-founder’s future contribution in time, risk, skills and capital, not who had the idea. Equal splits are increasingly common for two-founder teams, but they only stay fair when everyone vests on the same schedule.

What does 4-year vesting with a 1-year cliff mean?

No shares vest during the first 12 months. At the one-year cliff, 25% vest at once. The remaining 75% vest monthly over the next 36 months. A founder who leaves before the cliff generally keeps nothing.

Should co-founders have vesting?

Yes. Founder vesting protects the founders who stay if someone leaves early, and investors generally expect to see it. Without vesting, a departed co-founder can keep a large stake while contributing nothing, which creates dead equity on the cap table.

What is double-trigger acceleration?

Double-trigger acceleration speeds up a founder’s unvested shares only if two things happen: the company is acquired, and the founder is then terminated without cause or resigns for good reason within a set period. Investors generally prefer it to single-trigger.

When do founders need to file an 83(b) election?

An 83(b) election must be filed with the IRS within 30 days after restricted shares are transferred, using Form 15620 or a qualifying written statement. The deadline is strict and generally can’t be fixed later, so confirm with a tax professional immediately.

How to trademark a business name comes down to four moves: search the USPTO database to make sure nobody already owns a confusingly similar mark, pick the right class of goods or services, file a base application with the USPTO for $350 per class, and answer anything the examining attorney sends back until the mark registers. Clean applications are averaging about 10 months to registration right now, and you can file yourself if you’re U.S.-based. The real risk isn’t the paperwork. It’s waiting.

Here’s the line I want every founder to remember: your brand is your most valuable asset, until someone else registers it. You can spend three years building a name, an audience and a reputation, and still not own the one word people search for when they want you. An LLC filing doesn’t give you that. A domain doesn’t either. A federal trademark registration does.

If you want to see the actual filing screens before you read my decision tree, this walkthrough from attorney Elizabeth Potts Weinstein goes through the USPTO’s current Trademark Center step by step, including identity verification, classes and the new fees.

Why Your Business Name Isn’t Protected Yet

Most founders think they’re covered because they did one of three things: registered an LLC, bought the .com, or started posting under the name. None of those is a federal trademark.

• Your LLC or corporation stops another company from registering the exact same entity name in your state. It does nothing about someone in another state selling the same thing under the same name.
• Your domain is a lease on an address. It’s not a right to the name.
• Using the name does create common-law trademark rights, but usually only in the geographic area where you actually trade. That’s thin protection for an online business that sells everywhere.

A federal registration on the Principal Register is what gives you nationwide priority, the legal presumption that you own the mark, the right to use the ® symbol, and real leverage when a copycat shows up on Amazon, in the App Store or in a Google ad bidding on your name.

Forming the entity is still step one. When I wrote about why I formed the company before I felt ready, the point was that structure creates momentum. A trademark is the next layer of that same structure. The entity protects your personal assets. The trademark protects the thing customers actually remember.

The Founder Horror Story I Keep Seeing

It usually goes like this. A founder launches with a great name, gets traction, maybe raises a little money or lands a big retail partner. Then a letter arrives. Someone else filed for a similar name in the same category first, or has been using it longer. Now the founder has three options, and they all hurt: pay to license it, fight it in a proceeding that can cost far more than the original filing ever would have, or rebrand after the market already knows them.

The rebrand is the one people underestimate. It’s not just a new logo. It’s packaging, signage, the domain, every social handle, every backlink, every review that mentions the old name, and every customer you have to re-teach. I’ve watched founders lose a year of momentum to a problem that a $350 filing and an afternoon of searching would have exposed on day one.

There’s a quieter version too. You file, but you file too narrowly, in the wrong class, or with a name that’s basically a description of what you sell. The application gets refused, and you’ve burned months while a competitor builds on the same ground.

How to Trademark a Business Name in 7 Steps

1. Pick a name that can actually be protected. Invented words (Kodak) and arbitrary words (Apple for computers) are the strongest. Suggestive names that hint at the product are usually fine. Purely descriptive names, like “Best Coffee Roasters,” are hard to register, and generic words can’t be registered at all. If your name describes what you do, expect a fight.
2. Search before you fall in love. Run the name, close spellings and sound-alikes through the USPTO trademark search system. Then search Google, state business registries, Amazon, app stores and social platforms. The test isn’t “is it identical?” It’s whether customers would likely be confused, given similar names on related goods or services.
3. Choose your classes. Trademarks are registered by class of goods or services, and there are 45 of them. A software company, a clothing line and a coaching business sit in different classes. Each class you add costs another $350, so file for what you sell now and what you’ll realistically sell soon.
4. Decide who owns it. In most cases the applicant should be the business entity that actually uses the name, not you personally. That keeps the brand on the company’s books, which matters when you raise money or sell. If you hold it personally, put a license agreement in place.
5. Pick your filing basis. If you’re already selling under the name, file “use in commerce” and submit a specimen showing the mark as customers see it: a product label, packaging or a web page offering your services under the name. If you haven’t launched yet, file “intent to use” to lock in your priority date now, then prove use later.
6. File in Trademark Center. You’ll need a USPTO.gov account with verified identity. Use the pre-approved descriptions from the Trademark ID Manual instead of writing your own. Free-form descriptions trigger a $200-per-class surcharge.
7. Watch the mailbox, then calendar the maintenance. An examining attorney will review the application. If they issue an office action, you generally have three months to respond. If it’s approved, the mark is published for opposition, then registers. After that, maintenance deadlines start running, and missing one kills the registration.

What It Really Costs to Trademark a Business Name in 2026

The government fees are the easy part to budget. These come straight from the USPTO trademark fee information page and the current USPTO fee schedule, effective since January 2025.

So a clean, one-class application filed using the ID Manual costs $350 in government fees. A two-class intent-to-use filing with one extension lands closer to $1,250 before any legal help. If you hire an attorney, flat fees for a single-class filing commonly run from several hundred to a couple of thousand dollars, plus more for a full clearance search or office action responses. Get a written quote.

How Long It Takes

As of October 2026, the USPTO’s processing wait times show an average of 4.3 months from filing to first examination and 10.4 months to registration or abandonment. That’s faster than the 12 to 18 months founders were quoted a few years ago, but those are averages for applications that move cleanly.

Add time for an office action, an opposition, or an intent-to-use filing where you still need to launch and prove use. A realistic founder planning window is 10 to 18 months. That’s exactly why timing matters: your rights generally date back to your filing date once the mark registers. Every month you wait is a month someone else can file first.

DIY vs Attorney: The Decision Tree

The USPTO lets U.S.-domiciled applicants file on their own. If you’re domiciled outside the U.S., you’re required to use a U.S.-licensed attorney. For everyone else, here’s how I’d decide:

My rule is simple. If the brand is the business, don’t let the cheapest part of the process be the weakest part. A clearance opinion from a trademark attorney before you print packaging or pay for a rebrand is one of the best-value legal spends a founder can make.

One more warning: once your application is public, you’ll get official-looking letters and emails asking for money. The USPTO has a whole page on recognizing common trademark scams. Real USPTO correspondence comes from uspto.gov, and real deadlines show up in your file in the USPTO’s status system.

When to File: The Founder Protection Sequence

Timing is where most founders get it wrong. They treat the trademark as something to do “once the business is real.” By then, the name is valuable enough to steal and too known to change cheaply. Here’s the order I’d follow:

1. Form the entity so the business, not you, can own the brand.
2. Clear the name before you buy inventory, print anything or launch ads.
3. File the trademark, intent-to-use if you haven’t launched, so your priority date starts now.
4. Lock in the supporting assets: domain, social handles and marketplace brand programs.
5. Put founder agreements and protection in place so the company, and the brand it owns, survives a co-founder exit or a worst-case event.

In the first-time founder blueprint I laid out, step six is building a brand ethos, not just a logo. The trademark is how you make sure the ethos you build actually belongs to you.

Keeping Your Trademark Alive

Registration isn’t the finish line. According to the USPTO’s maintenance requirements, you must file a Section 8 declaration of use between the fifth and sixth years after registration, then a combined Section 8 and 9 renewal between the ninth and tenth years, and every 10 years after that. There’s a six-month grace period with an extra fee, but miss that and the registration is cancelled.

Put both dates in your calendar the day the registration certificate arrives. Then actually police the mark. Set a Google Alert for your name, check new filings in your class a few times a year, and act quickly when you see something close. A trademark you don’t enforce gets weaker.

Frequently Asked Questions About Trademarking a Business Name

How much does it cost to trademark a business name?

The USPTO base application fee is $350 per class of goods or services. Surcharges of $100 to $200 per class apply if information is missing or you write a custom description. Attorney fees, if you hire one, are extra.

How long does it take to trademark a business name?

The USPTO currently averages about 4 months to first examination and about 10 months to registration. Office actions, oppositions or an intent-to-use filing can stretch that to 18 months or longer.

Can I trademark a business name myself?

Yes, if you’re domiciled in the U.S. you can file directly through the USPTO’s Trademark Center. Foreign-domiciled applicants must use a U.S.-licensed attorney. Consider an attorney if your name is close to existing marks or covers several classes.

Does forming an LLC trademark my business name?

No. An LLC registration only reserves the entity name in your state’s business records. It doesn’t give you federal trademark rights or stop businesses in other states from using a similar name for similar goods or services.

What’s the difference between ™ and ®?

You can use ™ with any name you’re using as a brand, registered or not. The ® symbol is only for marks registered with the USPTO. Using ® before registration can cause legal problems.

This article is educational and isn’t legal advice. Trademark law depends on your facts, your industry and where you sell. Before you invest heavily in a name, talk to a licensed trademark attorney about a clearance search and filing strategy.

Key person insurance is a life insurance policy a business buys on a founder, owner or critical employee. The company owns the policy, pays the premiums and receives the payout if that person dies, so it has cash to cover lost revenue, repay debt, hire a replacement or buy out an owner’s shares. For most startups, it is the cheapest way to make sure the company survives the loss of the person it’s built around.

Here’s the line I keep coming back to: if your company dies when you do, you don’t have a company yet. You have a job with investors. I’ve seen founders spend months on a logo, a pitch deck and a perfect cap table, and zero minutes on the question every serious investor, lender and co-founder is quietly asking: what happens to this business if the person running it is suddenly gone?

If you want the basics in three minutes before we get into the founder-specific stuff, this short explainer from Alliance Group covers how key person coverage works and why business owners use it.

What Is Key Person Insurance?

Strip away the jargon and it’s simple. The business takes out a life insurance policy on someone whose loss would seriously hurt it. That’s usually the founder or CEO, but it can be a technical co-founder who owns the codebase, the rainmaker who brings in most of the revenue or the operator who holds the key client relationships. You’ll also hear it called “key man insurance” or “key employee insurance.” Same product.

Three roles define it:

• Owner: the business.
• Premium payer: the business.
• Beneficiary: the business.

That last point is what separates it from the policy you buy for your family. Key person coverage doesn’t put a cent into your spouse’s account. It puts cash into the company’s account at the exact moment the company is most fragile. Most policies are term life, because founders need protection for a specific risk window (the next 10 to 20 years of building), not a lifelong investment product. Some carriers also offer a key person disability policy, which is a separate contract and worth asking about.

Here’s the uncomfortable truth I tell first-time founders: the more the business depends on you, the more valuable you are and the more exposed everyone else is. Being indispensable feels like a badge. To a lender, it reads like a single point of failure.

Key Person Insurance vs Term Life vs Buy-Sell Life Insurance

These three get mixed up constantly, and the confusion leaves gaps. They solve different problems for different people. Most founders with a co-founder and a family need all three, not one.

If you haven’t sorted the personal side yet, start there. I wrote a whole founder’s guide to term life insurance because I put it off far too long myself. Key person coverage sits on top of that. It doesn’t replace it.

Who Owns the Policy and Who Is the Beneficiary?

The business owns it and the business is the beneficiary. That’s the whole point. If you personally own it, it’s just personal life insurance with a confusing name.

Two founder-specific details matter here. First, the insured person has to know about it and agree in writing before the policy is issued. More on why that’s critical for taxes below. Second, the payout belongs to the company and can be used for anything the business needs: payroll during the transition, a recruiter’s fee for a new CEO, paying down a loan that a bank might otherwise call or giving investors an orderly wind-down instead of a fire sale.

How Much Key Person Insurance Do You Need?

There’s no single formula, but there are three practical ways founders size it, and good advisors often blend them:

1. Compensation multiple. A common rule of thumb is 5 to 10 times the person’s total compensation (salary, bonus, equity value and benefits). It’s simple, and it’s what many carriers will start from.
2. Replacement and runway cost. What would it actually cost to keep the company alive for 12 to 24 months without this person? Recruiting fees, an interim executive, lost deals, delayed product. Add it up honestly.
3. Obligation matching. If you have a bank loan, venture debt or investor terms tied to you, match coverage to what you owe. Some lenders and investors require it as a condition of closing.

For early-stage founders who pay themselves a modest salary, the compensation multiple understates their real value to the business. That’s why you’ll often see $1 million to $3 million of coverage on a seed or Series A founder. Carriers will ask for financials to justify the number, so the amount has to make economic sense. You can’t insure a pre-revenue side project for $20 million.

How Much Does Key Person Insurance Cost?

Less than most founders assume. For a healthy, non-smoking founder in their 30s or early 40s, a 10 to 20 year term policy is often in the range of roughly $500 to $1,000 per year for every $1 million of coverage. Treat that as a ballpark, not a quote. Age, health, the term length, the carrier and the amount all move the price, and permanent coverage costs far more.

I like to frame it against the rest of the budget. Founders will happily pay for software they barely use. Key person coverage is often cheaper than a single seat of software for the whole team, and it’s the only line item that pays out precisely when everything else stops working.

One tax note on cost: when the business is the beneficiary, the premiums are generally not tax-deductible under IRC Section 264. Plan for it as an after-tax expense.

Is the Key Person Insurance Payout Tax-Free?

Usually, yes, but only if you do the paperwork before the policy is issued. This is the part most founder content skips, and it’s the part that can cost you.

Under IRC Section 101(j), death benefits from employer-owned life insurance can become taxable income above the premiums paid unless two things are true. One, the insured falls into a qualifying group, such as a director, a highly compensated employee or someone employed within the 12 months before death. Founders and executives almost always qualify. Two, the employer met the notice and consent rules before issue. That means the person was told in writing that the company intends to insure them and for up to what amount, that the company will be the beneficiary, and they consented in writing.

The business also reports employer-owned policies each year on IRS Form 8925. Ask your carrier for their 101(j) notice and consent form at application, sign it before the policy is issued and keep a copy with your corporate records. It’s a 10-minute task that protects a seven-figure payout.

Buy-Sell Agreement Life Insurance: Cross-Purchase vs Entity-Purchase

If you have a co-founder, key person coverage only solves half the problem. The other half is ownership. If your co-founder dies holding 50% of the company, their equity typically goes to their estate. Now you might be building a business with their spouse, their kids or their estate’s lawyer as your new partner, none of whom signed up for that.

A buy-sell agreement fixes that in advance. It says that if an owner dies (and often if they become disabled, leave or divorce), their shares must be sold, at a pre-agreed price or formula, to the remaining owners or the company. Life insurance is the usual way to fund it, because the company rarely has a few million dollars of spare cash on the worst day of its life.

There are two main structures:

• Cross-purchase: each owner buys a policy on the other owners. When one dies, the survivors receive the payout and buy the shares directly. Survivors generally get a higher cost basis in the shares they buy, which can matter at exit. The catch is complexity: the number of policies grows fast as you add owners (three owners need six policies).
• Entity-purchase (stock redemption): the company owns one policy on each owner and buys back the deceased owner’s shares. It’s simpler to administer, especially with three or more owners. But survivors don’t get the basis step-up, and after the U.S. Supreme Court’s 2024 decision in Connelly v. United States, company-owned proceeds earmarked for a redemption can increase the company’s value for the deceased owner’s estate tax.

Neither one is automatically right. Two co-founders often lean cross-purchase. A larger owner group often uses an entity-purchase or a hybrid structure. This is a conversation for a business attorney and a CPA together, and the agreement and the policies have to match. I’ve seen co-founders buy the insurance and never sign the agreement, which leaves cash with no rules about what it’s for.

How to Set Up Key Person Insurance: 6 Steps

1. Name your key people. Ask: whose sudden absence would cut revenue, stall the product or trigger a loan or investor clause? Usually it’s one to three people.
2. Size the risk. Run the compensation multiple, the 12 to 24 month replacement cost and your debt obligations. Pick a number you can defend with financials.
3. Choose term length. Match it to your realistic risk window, often 10 to 20 years or until a likely exit.
4. Get independent quotes. Use a licensed broker or advisor who can shop several carriers. Expect a medical exam and a request for company financials.
5. Sign the 101(j) notice and consent before issue. Then calendar Form 8925 with your CPA every year.
6. Align your agreements. If you have co-founders, put a funded buy-sell agreement in place, and tell your board and investors what’s covered.

Key person coverage is one layer of a bigger protection stack. Liability, cyber, D&O and property all play a role, and I broke down what business insurance you actually need so you can see where this one fits.

Mistakes I See Founders Make

Waiting until the round closes. The best time to buy is when you’re young, healthy and before anything changes. Insurability isn’t guaranteed later.

Confusing it with personal coverage. A key person policy protects the cap table, not your kids. You need both.

Skipping the consent form. A missed 101(j) notice can turn a tax-free payout into taxable income.

Buying insurance without a buy-sell agreement. Money without rules creates fights. Paper first, then policies.

Never reviewing it. Revisit coverage after every raise, big hire or valuation jump. A $1 million policy on a company that’s now worth $30 million is barely a speed bump.

Building something that outlives your involvement isn’t morbid. It’s what makes a company investable. The founders who think about this early aren’t more pessimistic than everyone else. They just take the business seriously enough to protect it.

This article is educational and isn’t personal financial, tax or legal advice. Talk to a licensed insurance advisor, CPA and business attorney about your situation before you buy coverage or sign a buy-sell agreement.

Frequently Asked Questions

What is key person insurance in simple terms?

It’s life insurance a business buys on a founder or critical employee. The company owns the policy, pays the premiums and receives the payout, so it can cover lost revenue, debt or hiring if that person dies.

Who is the beneficiary of a key person policy?

The business. It owns the policy, pays the premiums and receives the death benefit. The insured person’s family gets nothing from it, which is why founders also need personal term life insurance.

How much key person insurance should a startup founder get?

A common rule of thumb is 5 to 10 times total compensation. Early-stage founders often carry $1 million to $3 million, sized to replacement cost, runway and any loan or investor requirements.

Is key person insurance tax-deductible?

Generally no. When the business is the beneficiary, premiums usually aren’t deductible. The payout is generally tax-free if the IRC 101(j) notice and consent rules were met before the policy was issued.

What is the difference between key person insurance and a buy-sell agreement?

Key person insurance gives the company cash to survive a loss. A buy-sell agreement decides who buys a deceased owner’s shares and at what price. Life insurance is often used to fund the buy-sell.