Three ways to protect your business that are often overlooked
Your business is up and running, and you are now enjoying the challenges and independence that being your own boss can bring. But have you considered the downside? Your sole source of income comes from your business – if you become ill or incapacitated and have to stop working, your income likely stops as well. Yet you may have a mortgage, a family, and other financial commitments that rely on that income coming in every month.
“Many business owners don’t realize that they can protect their business against unforeseen life events,” explains Andre Guillemette, Wealth Protection Specialist at BlueShore Financial. “If something were to happen to you or your business partner, you can ensure your financial obligations can still be met through insurance policies specially designed for business owners.”
1. Business Disability Insurance
You may already be covered by personal health and life insurance, but what would happen to your business if you found yourself unable to work for a period of time, or even indefinitely?
Business disability insurance – available for both short- and long-term – can replace business income in the event of an accident or illness, in the form of a monthly benefit intended to replace two-thirds of your after-tax income. Benefits can continue until you are able to return to work or you reach the age of 65.
Recent industry insurance research shows that you are much more likely to suffer from a disability than you are to die prematurely. With that in mind, you could consider disability insurance even more important than life insurance for your business.
2. Business Interruption Insurance
While disability insurance will help you cover your personal monthly income requirements, your business has its own bills to consider. That’s where business interruption insurance steps in.
“Working hand in hand with business disability insurance, business interruption insurance will pay the business bills while you are off work,” explains Guillemette. “Rent, utilities, suppliers, and most importantly, your valuable employees, all need to be paid even though you are unable to work. Having this kind of insurance keeps your business functioning during a challenging time.”
3. Key Person Life Insurance
When running a small business, your greatest asset is often found in one or two key people that are at the heart of your ongoing success. If something unexpected was to happen to that person, you can protect your business so that it doesn’t grind to a halt.
“Losing your biggest asset shouldn’t mean losing your business,” says Guillemette. “While you can never truly replace a key person, you can ensure that your business remains afloat while you look to find another resource or make a decision about what direction to take with your company.”
Businesses are eligible to purchase the same life insurance policies for a key person that are offered to owners, with flexibility and investment opportunities built in. Knowing that you would have access to enough working capital to keep the business running while you find and train a replacement can offer considerable peace of mind.
Finding – and filling – the gaps
“The first step in any conversation is identifying any gaps in your coverage,” notes Guillemette. “Your business insurance advisor can review your situation to help discover what’s missing and then find the solution that’s going to work best for you. The key is starting that conversation.”