I remember a time when I worked in a warehouse packing grocery pallets. I was trying to get
into shape to take police training, and it seemed logical to get work that would allow me to get into
better condition while I worked.
What I found was hard physical labor with very little in the way of thought required. The days
and weeks passed quickly though, and I definitely got into great shape. At least until the morning I
reached for a box in the exact same fashion I had done thousands of times before. There was a soft
click in my shoulder followed by a wave of pain that carried right to my fingertips. Right away I
knew that I was in trouble and this was not just one of those random twinges that happen when you do
Alberta statistics tell the tale, with just under 8% of people ages 25-44 having some form or
permanent disability, and that number jumps to 9% in the 45-64 crowd. 1 in 3 people will experience a
disability of 6 months or longer in their working career. 43% of instances where a person uses their
retirement savings prematurely is due to an illness or injury.
So, as business owners or self employed contractors, what do we do about this? There’s a few
key questions that will help us determine exactly how to decide the amount and types of coverage we
need. The best route, as always, is to have a discussion with your financial planner or advisor to get all
Question #1 – How long could I survive without income from my business? Generally
speaking, if you go to a longer “waiting period”, your premium drops. There is a substantial difference
in a policy that pays day 1 compared to on that pays day 121. Having an emergency fund of 3-4
months cash in your corporation allows you a lot more flexibility in how you plan.
Question #2 – How much cash does my business need to keep running without me? Make sure
to think about not only what you would need, but what your business would need! Rents, dues,
insurance and other expenses do not disappear because you are sick or injured.
Question #3 – How long do I need to be unable to work in order to close the business down?
This is one of the hardest questions for an entrepreneur to consider. Its also one of the most important
ones you can ask! Knowing ahead of time where the lines are and what would cause you to let your
business go protects you from making an emotional decision to go back to work to early or let an
unmanageable situation drag on too long.
The main thing is to ensure that you and your family are protected! Disability happens, and a
lack of planning for that can create massive problems not only for your business, but for your life.
To learn more about disability insurance see Andy’s bio or check out his website.