7 Business Owner Basic Insurance Options to Prevent Financial Disaster
If you had a goose who laid golden eggs, which would you insure: the goose or the egg?
I hope you would answer YOU! The producer of the Golden Egg.
As a business owner you are the generator of your own income. Have you ever given thought to how your life would be affected if you were unable to work due to an injury or illness?
Do you contribute to WorkSafe BC or Employment Insurance? Many do not.
Yet, accidents happen, and illnesses happen all the time.
Imagine running out of the house to empty the garbage and you slip on a rain-slicked pavement, or trip on the stairs and break a leg, or hit your head and have to take time off from work.
Would you be able to continue in your business, pay your rent/mortgage or pay for extra medical costs from practitioners that you may have to pay out of pocket for?
You are your most valuable asset!
Your ability to earn income is your biggest asset over your life
We are told we need to insure our cars, houses and life but what about our ability to earn income?
A common MYTH: insurance coverage is expensive.
I disagree. Not all insurance is created equal. I also believe having some coverage is better than zero coverage.
Assessment Exercise: What would the cost be if you did not have the ability to earn income? Drain your RRSP’s? Close your business?
The Key to Cracking the Money Code
Begin by having a firm understanding of your needs, weaknesses and risks and know what your priorities are.
It is also great if you have some basic knowledge – below are some basics and highlights. I am also available to guide you to the right solutions for your individual needs.
Living Benefits
Let’s take a look at some of the basic insurance I commonly recommend to Small Business owners and Solo Entrepreneurs as well as different options you have at your disposal.
Income Replacement Insurance and Disability and Illness Income Replacement Insurance.
Your options here include:
- Self Insure. This is where you have money specifically saved to cover your income and business expenses for 6 months. Yes – you can use your RRSP however, it will have a great impact on your future income needs in retirement.
- WorkSafe BC or other Provincial Coverage. Covers you if you are injured on the job if you are contributing to the program.
Click here for further information - CPP disability benefits.
The disability benefit is a monthly payment you can get if you:
- are under 65
- contributed enough to the Canada Pension Plan
- have a mental or physical disability that regularly stops you from doing any type of substantially gainful work
- have a disability that is long-term and of indefinite duration, or is likely to result in death
- Employment Insurance – Medical. Employment Insurance (EI) sickness benefits can provide you with up to 15 weeks of financial assistance if you cannot work for medical reasons. You could receive 55% of your earnings up to a maximum of $595 a week. (Is this enough to cover you?)
You must get a medical certificate to show that you are unable to work for medical reasons. Medical reasons include illness, injury, quarantine or any medical condition that prevents you from working. You also must be contributing to the plan.
Click here for further information - INVEST in your OWN Insurance Plan. There are numerous insurance companies that offer Income Replacement Policies that will pay you a percentage of the income you lose due to illness or injury.
They are all a little bit different and offer a variety of coverages depending on your individual needs and budget. An experienced Financial Planner and Insurance Agent can work with you to assess your needs and then shop the different insurance companies for the best solution for you. - Critical Illness Insurance. This is coverage you purchase that will pay you a lump sum should you experience any number of Critical Illnesses like Heart Attack, Cancer, Stroke, and Blindness only to name a few.
This insurance came in handy for my family. My husband experienced a heart attack June 2020. It had to have been one of the scariest experiences of my life and his too.
Once the dust settled and he survived his surgery I remembered to review our current insurance coverage and we were able to claim $30,000 as a tax-free lump sum. We had only purchased the insurance and was I ever happy we did.
There are my different Critical Illness Insurance options available to you, Your Financial Person can help you find the right fit. - Business Overhead Expense Insurance. This insurance reimburses you, the business owner or your company, for overhead expenses in the event of a disability that prevents you from working.
Common expenses covered are office lease payments, utilities, and expenses you pay to keep your business operating. One of the most economical coverages and most overlooked.
These are your basic insurances simplified for your general information. You have unique needs and budget that must be assessed to help determine which options are best for you.
While assessing your protection needs, ask yourself these key questions:
- Do I have dependents I need to support? Spouse and children, perhaps employees.
- If I get sick or experience an injury or disability, do I have the financial resources to cover my expenses and obligations 3 months, 6 months up to 3 years?
Remember, saying “I will look into it later” or “it won’t happen to me” is not a prudent plan.
You work hard in your business and the last thing I would ever want to happen is for you to experience a devastating event where you risk all you worked for.
Take control of your financial life, you will be happy you did. I am happy to provide you with a free consultation.
Barb Wallick
About the Author, Barb Wallick
Barb Wallick works with women who are looking to Create a Life They Never Want to Retire From.
A Personal Financial Planner, with 35 years experience along with her 3 Coaching Certifications, Barb truly guides her clients starting with Creating Clarity of Purpose, Goal Setting, Releasing Money Blocks using Time Line Therapy ® and practical Financial Planning.
For more information, visit www.barbwallick.com or find her on Facebook at www.facebook.com/barbswallick
