Understanding Insurance for the Self-Employed
<h2>What is your most valuable asset?</h2>
<p>In business, your most valuable asset is you. Your customers, your strategies, it's all about the entrepreneur. Insurance is meant to broaden your source of income when you are not able to work and provide for your family.</p>
<p>Think about what you would do if you had to take sick leave. What impact would this have on your business? What would you do if you had cancer? How much would it cost you to stop working? Would you want to have a loved one with you during a difficult time like this? Would your savings be sufficient, or would you have to go into debt? In all situations, insurance is designed to protect your most precious asset – you.</p>
<p>All the effort put in and time invested to build up your clientele can be destroyed by a few months without income. Especially in the first five years of business. With COVID, we see the impacts of a work stoppage. Now imagine, after this difficult year, what would be the impact of a work stoppage on your business next year, or the one after that?</p>
<p>We cannot predict what's going to happen, and that's why you protect yourself from the different scenarios that could hurt your business. No one is safe. The worst mistake to make is to say to yourself that "this will not happen to me". If we think in this way, we are playing Russian roulette with our company. Who would want to play Russian roulette when you have a 50% chance of being diagnosed with cancer? What about a 40% chance of being disabled for more than 90 days? Building a business is not based on luck, it is your diligence that will be instrumental.</p>
<h3><strong>Preparing for medical leave from work</strong></h3>
<p>Let's look at the possible scenarios. The first one is an absence from work for medical reasons – a broken arm, depression, anxiety, etc. In this scenario, there are short-term and long-term disabilities. The government's Employment Insurance plan protects employees for the first 15 weeks. However, as a self-employed person, you are not covered by EI.<br />
<br />
The first step is to <a href="https://www.momenteo.com/blog/the-importance-of-an-emergency-fund">have an emergency fund</a> of 6 months of monthly expenses to be prepared for the unforeseen. The second step is to protect yourself by getting disability insurance. It will replace your salary during periods when you cannot work as well as a period of gradual return to work. After a waiting period, it pays a monthly amount for a certain amount of time. The waiting time and the duration of the payments are adjusted to your situation to best meet your needs.</p>
<p>This preparation allows you to keep your business savings so that you can return to the market. Imagine having to go back into business after an illness that lasted several months with even more debt and almost no customers... Well, with this scenario, you have a 40% chance of experiencing this. Prepare.</p>
<p>The second scenario is to prepare for a serious illness. This absence from work can be long, painful, and very expensive. Despite the fact that we live in Quebec, not all cancer-related expenses are covered – far from it. A common example is parking. In the scenario of cancer treatment, regular trips to hospitals and treatment centers are required. It may seem trivial, but at $10 a day, several times a week for a whole year or more... And this is only one of the factors, will your spouse take time off to be with you? If so, your income isn't the only one to replace.</p>
<p>To prepare for this situation, critical illness insurance pays a lump sum based on your situation and needs. There are two kinds of insurance: temporary and permanent. Temporary coverage covers you for a lower price, but for a predetermined period after which the price increases. A temporary 10-year plan would increase in price every 10 years. Permanent coverage covers you at a fixed price that will never increase. There is no universal solution, some people need temporary coverage and others need permanent. It varies a lot depending on the situation, budget, etc.</p>
<h3><strong>Consider your key employees in your business plan</strong></h3>
<p>For contractors who have a key employee, consideration must be given to the possibility that the employee may become disabled. So, you need to plan a way to replace the income they generate while you're looking for a replacement. Disability Insurance for key people can be adjusted to the time frames you need.</p>
<h3><strong>In the event of a death</strong></h3>
<p>I cannot talk about insurance without discussing life insurance. Our life insurance options are numerous: pay the share of the business held by your deceased partner, bequeath the house to the spouse, pay funeral expenses, protect the lifestyle of your children, bequests of business, etc. In business, the scenario that hinders your growth is one where you find yourself paying several thousand dollars to buy back your business partner's share in the event of their death. Or worse, you don't have the funds and the deceased's spouse becomes your business partner by inheritance.</p>
<p>Like health insurance, there is temporary and permanent coverage for life insurance. Your needs can be grouped in the same way. Your mortgage ends in 25 years, so that is temporary. However, as long as you have a chance of dying, funeral expenses will have to be paid. This is a permanent need. So, you need to have a combination of the two tailored for your situation.</p>
<h3><strong>Prepare for professional mistakes and lawsuits</strong></h3>
<p>In our last scenario, let's look at professional liability insurance. When you buy a defective product, you have the right to be reimbursed, but what about a service rendered? Damage may not be as simple to sort out as a damaged object. A doctor who makes a mistake can cause irreversible damage. If such a situation occurs, there are legal consequences that can become costly quickly. Liability insurance covers you for a predetermined amount to pay legal fees, pay damages in a lawsuit, etc.</p>
<p>Your needs will always change depending on your goals, your family situation... My name is Camille Bourque and I am a financial planner. What I love most is helping business professionals reach their dreams through all phases of their life. My first financial course at university made me discover that this job was tailor-made for me! So, I continued my bachelor's degree at Laval University and perfected my knowledge with the training of the Quebec Institute of Financial Planning. Since the beginning of the pandemic, in addition to removing the boundaries of work, I have discovered my passion for reading and languages.</p>
<p>And you? What are your plans? <a href="http://www.facebook.com/camille.bourque.pl.fin/" target="_blank">Discuss them with me!</a> </p>
<p>Camille Bourque, Financial Planner</p>