Why Entrepreneurs Need to Invest in Disability Insurance
Entrepreneurs are high flyers, typically viewed as a group of people who get excited at taking risks. While being adventurous is part of being a business owner, there is another, more important aspect that you need to consider – the fact that you are responsible for a family at work as well as one at home.
You need to safeguard your business, which you’ve worked so hard to build, as well as the employees, vendors and partners who depend on you. Other than life insurance, one of the most crucial possibilities to consider is how your business will survive in case an injury or illness leaves you unable to run it.
How Can Disability Insurance Help Protect You as a Business Owner?
As a business owner, you should definitely invest in long term or short term disability insurance, which guarantees a certain amount of financial support in case you face an injury/accident/illness that affects your ability to work, for the coverage duration or term that you’ve picked.
Here are some of the main reasons that disability insurance is so important for entrepreneurs:
1. Replacement for Primary Income
In most cases, the entrepreneur is the primary bread winner for the family. Unlike a person employed at a company, entrepreneurs do not have any sort of employer-provided benefits. As a business owner, you are the employee as well as the employer too, so you would have to provide for yourself, even when you are unable to earn.
A disability would also impact everybody dependent on your business. If you cannot provide, then someone else should be able to step in and support both families, the one at work and the one at home, and disability insurance is that ‘someone else’.
2. Life Insurance Is Not Enough
Most entrepreneurs do invest in life insurance, believing this will take care of every contingency. The problem is, life insurance only comes into play in the event of death. Entrepreneurs are usually in the age group of 25 to 45, where there’s a higher chance of being disabled due to illness or injury, than of premature death.
These odds only increase as a person’s age advances, emphasizing the need for disability coverage. In fact, you may even want to consider investing in long-term disability insurance so that your financial protection remains in place over the years, and you can focus on building your business further.
3. Tips for Choosing the Right Plan
Being aware of the main advantages of having disability insurance as a business owner as well as some of the common points involved will help you make a better decision about your investment.
Here’s a quick rundown of factors to keep in mind:
- Insurance Company – Ensure that the company selling the insurance is reliable, with a long history and enough stability to still be around when the time comes for you to claim benefits.
- Disability Definition – Insurance policies may specify their own definition of disability. Read through the documentation and double check that the policy’s terms match your potential needs.
- Non-Cancellable – The plan should not have a clause that says that it could be cancelled by the insurance company without your consent. Also, keep an eye out for fixed premiums throughout.
- Residual Cover – It is always a possibility that you might be partially disabled, but still unable to work at full capacity. The insurance should cover this as well, and allow you to enjoy partial benefits.
- Compare Plans – No single plan would meet all your needs, so compare and contrast insurance products and various riders to find the ones that give you maximum benefits at minimum cost.
Entrepreneurs don’t have the luxury of falling back on an employer for disability benefits. A disability can seriously derail their personal and financial life goals. Individual disability insurance can take care of these problems and minimize any damage caused by disability, so look into your options today!