When I first started my business, it was part time. I was a new mom and my number one priority was my new baby. I wasn't thinking big picture, or what my business or life would be like in 10 years. I wanted some extra income and to do something that I loved while raising my family, and this business was a perfect fit. In the beginning, I did the basics and worked everything myself. I had the freedom to do this, as my husband was the main breadwinner. My company was for extra money and keeping my natural entrepreneurial spirit happy.
Fast-forward a few years and another baby, I was even more driven to build this business into something real. The desire to control my life was strong. I wanted to be there for my kids, control my own destiny, and do something that I loved. I have an education in small business management and have attended enough sessions regarding smart management, and like many fellow business owners, I thought of the basics. When we think of business insurance we think of liability, business property. But there is one major thing that I have always shrugged off—preparing for the unexpected.
I am sure many fellow entrepreneurs feel nothing will ever happen that will cause them not to be able to work. We often feel that the costs of private benefit packages and insurance are not feasible, and so we push forward without them. If you are like me, you think that you will always work on your business. After all, we are entrepreneurs! We work through no sleep, sickness, and our maternity leaves. What could possibly happen that would stop us from doing what we love. Let me tell you that last year I learned a very hard lesson.
In the blink of an eye my life changed, I was injured and wasn't able to work. We figured it was just going to be a short-term problem that would quickly resolve and I'd be back at it. When you are an entrepreneur you have the control of when and how you work. You can modify and make do, especially if it is short term. Well what happens if it isn't short term? And what if it changes the one thing that makes you you? Think personal trainer who is paralyzed and confined to a wheelchair. A dentist who loses use of his hands. A designer who injures her brain and can no longer work at the computer. Anything can happen, and don't for a second think that it won't happen to you or your business.
Did you know that you have a 50% chance of being disabled for 3 months or longer at the young age of 35?
Statistics show that more women suffer long-term disabilities than men.
The foundation of your business could be jeopardized if you become disabled due to an injury or illness. Make sure you have a plan in place, call it your succession plan. Do it now before it is too late. Reach out to a financial planner or insurance broker, and speak about your options. They might not be as bad as you think!
A disability insurance example: A 36-year-old woman with an annual income of $55,000. The policy cost is $285 a month and would qualify her for $2,825 a month if she should become disabled—following a compulsory 90-day waiting period (another reason for the importance of paying your EI premiums for self employed sickness benefits), and continued until one of three things happen: she turns 65, she recovers, or she dies.1
I know to many that $285 a month seems like a lot, and, yes, it's possible you'll likely pay into it and never need to use it. But what if you were 36 and could never work again for the rest of your life? How will you pay your bills? Or save for your retirement? What does your own financial security mean to you?
Did you know that as self-employed women we are not only able to provide our own EI benefits for maternity leave, but also sickness benefits? Basic facts on Employment Insurance Special Benefits for Self-Employed People: In 2014, for every $100 you earn, you will need to contribute $1.88 in EI premiums up to a defined maximum—the same amount that employees pay. This means the most you will pay in EI premiums for 2014 is $913.68. You can expect to receive 55% of your average weekly earnings up to a defined maximum. In 2014, you can receive up to $514 per week, based on the maximum insurable earnings of $48,600 for that year.
Even if you decide to do nothing at all, maybe the costs are more than you want to spend, but at least you have thought about it and have your plan.
After all of those years building this business, your other baby, the last thing you want is to lose it all. Not preparing for the worst can certainly change the scope of your business and who you are as an entrepreneur. Protect your work, protect yourself, and invest in your long-term self.
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1Source: Visa, Do you have Disability Insurance?