Do you know what your most valuable asset is? Would you insure that asset if it worth more than a million dollars? Most people think it would be a home, a cottage property or maybe a rare piece of art or jewelry. Would you be surprised to know that is you?
You are your most valuable asset
If you are your most valuable asset, then why is it that many self employed people do not insure themselves with any form of insurance. If you earn an average of $5000 per month and you are currently 40 years old, between now and age 65 you would earn $1,500,000.00. (This is without factoring in any inflation). Without you and your ability to earn an income how would the insurance on your home or car be paid? As well; what would you have to live on, how would your medical bills be paid?
The reality is that 1 in 3 Canadians become disabled for at least three months during their working years. Unfortunately some disabled people become our low income earners dependant on government services. If you are self employed it is important for you to see someone to discuss your needs for insurance.
Disability insurance can vary greatly and can be customized to your needs. Often people don't want to spend money on “another” insurance product. Actually I am one of those people, formerly self employed “without” disability insurance. My thoughts and reasons were I was healthy, took care of myself, was physically fit. My job was low risk, seeing clients in their homes and working from my home office. I did not see the need to spend money on disability insurance.
Imagine my regret when I went on a ski trip with an investment firm, used the rental skis, and had a severe injury when the ski bindings did not release!
Six months later I found myself moving from Ontario to Alberta to recuperate from surgery and staying with my parents. Several months after that I finally gave in to the fact that I was going to have to sell my client base and make a permanent move to Alberta in order to continue healing.
Had I put in place even a small policy for $2000 to $3000 per month I could have stayed on my own and hired some help. Disability insurance is critical in your life plan and should be added into your budget now, not “I will think about it, maybe sometime in the future because right now I have too many bills or I don't believe in paying for more insurance.”
If you do have a disability policy, do you know what your policy covers you for and where and when you can get injured? There are many companies and many types of disability coverages. If you cannot understand your contract in your policy take it to someone that can explain the coverages and more importantly the key exclusions and the definition of disability. Many clients I ask either have no coverage or have purchased something at their job site, often it is a simple injury only policy with very limited coverage.
Another type of policy many people have is the life and disability at the mortgage company. This type of policy can be very limited and only pays your payment on your mortgage if you qualify under their definition of disability.
If you are injured when away skiing or travelling and can't work temporarily or worse yet become unable to return to your career what do you have saved to live on? Most people currently live month to month to cover expenses. If you have no disability insurance have you asked your spouse or family if they can pay your cost of living for you should anything happen? The new vehicle that you spend $500 to $1000 per month on plus $80 to $200 per month to insure, is it going to make its own payments when you can't?
I believe most people, like I used to, think that they don't have a need for another insurance or believe it won't be needed. You are the most valuable asset you have, without your ability to bring in money to pay for your lifestyle there will be no lifestyle.