Tuesday, 7 January 2014

Disability Insurance Policies for Self-Employed Individuals: Are These Really Necessary?

Alas, one of the pros and cons of self-employment is the lack of insurance that would typically be offered by an employer. Since you are the boss and solely reliant on your own ability to provide an income, then you have to look at the financial consequences to your income if something were to happen to you. Granted, as an entrepreneur you already have enough to think about besides the “what ifs”, but truly it can destroy your business and your personal life in one foul swoop if you’re unprepared for something major that occurs.

Having disability insurance is the responsible thing to do, especially if your family is relying on your income to sustain them. If you are just embarking upon the life of an entrepreneur, this is certainly something to contemplate. Especially if you have been reliant upon a group plan through a company you have been working for, you will need protection to supplement your income in case you become hurt, injured or sick, or suddenly in need to take a leave of absence.

What is disability insurance for self-employed? Do you really need it?

Some entrepreneurs bravely “take the risk” by not carrying any insurance on their own wellbeing. They feel fit as a fiddle, so why pay for something that may just be a waste of money – especially at a time when every penny counts?

Disability insurance is something you pay monthly, just like car insurance or homeowners or renters insurance. Adopting this mindset is similar, because you probably wouldn’t want to take the risk of totaling your car without insurance or having your house burn down without insurance, so why take the risk of something happening to you, which is the most important out of all three? Auto insurance isn’t going to cover your lost wages if you are self-employed, at least not without getting attorneys involved.

It’s just a good idea to have disability insurance rather than going without. However, you must be in good health, so when you’re feeling good, it is the best time to get it. When you check into which policy is best, make sure you read through and discuss the provisions of what is or is not included within the benefits package. Go through every scenario that you can think of.

This the most common type of disability insurance for self-employed individuals:

Own occupation: Provides a total disability benefit if you are unable to practice your chosen profession due directly to injury or sickness, even if you begin working again in a new career.

With this type of disability insurance there will also be two optional riders you can choose, and one is the most obvious and common choice. With either of these disability insurance for self-employment choices there will also be two optional riders you can choose, and one is the most obvious and common choice.
You should have residual disability, which gives you partial benefits if you are still able to work, but only on a limited basis. Most claims fall under this category, so not getting this rider is really a waste to have disability insurance at all.

The second option is a rider that would allow you to increase your monthly benefits at any time, even if you experience a change in health. This one is a good protective measure to make sure you still get compensated even as your income increases – which it should every year – the longer you are in business.

Talk to your insurance rep about disability insurance for your business, even if you are a sole proprietor. No matter what type of industry you are in!

For more information please contact Independent Financial Concepts Group today at 1-416-849-1653 or visit www.wecoveryou.ca.