Self-Employed Disability Insurance – Protection for Business Owners

There are a number of benefits to being your own boss. The freedom to set your own hours, control over clients and business relationships, along with a feeling of liberation, are some of the main reasons an increasing number of Canadians are turning to self-employment. Self-employment comes with its list of challenges, one of which is health insurance, and more specifically, disability insurance.

Losing the safety net of an employee benefit program offered by large employers is challenging and sometimes costly. Purchasing disability insurance through a group plan will have lower rates, no medical exams, and no financial underwriting, but once you leave the group plan to become self-employed, the rules change! Rates are higher, underwriting requires more details, and you may need to undergo a medical exam. This new set of hurdles to jump over tends to be the reason most self-employed people avoid getting any kind of extended health care.

It is estimated that 15% of Canada’s workforce is self-employed. A recent study showed that more than 500,000 Canadians said they had set up their own businesses in the last two years, which is a record number. (CIBC study, Globe & Mail). Failure to establish adequate disability coverage to protect earning capacity can have its consequences. Disability insurance will help protect your business (overhead) and your family in the event you are unable to go to work, an important component to consider when you are self-employed.

You may earn more than you would working for someone else, but what if you get sick? Or do you have an accident that leaves you without the ability to earn an income, either temporarily or permanently? You likely have a number of medical bills, personal expenses, and your bills may not be as patient as you’d hoped. This is where a well-structured disability insurance plan can create a safety net, allowing you to focus on getting back to good health and taking the time off from work that you need.

While most entrepreneurs in their 40s and 50s are more aware of their own mortality, there has been a marked increase in the number of entrepreneurs starting their own companies in their 20s and 30s. While encouraging for the economy, it’s important not to forget the benefits and importance of a well-structured disability plan.

A simple question to ask yourself is: How do you plan to live if you cannot earn an income? Or more accurately, how will you support your dependents, pay your staff, or pay your business overhead if you can no longer earn an income?