Typically, small business owners focus more on protecting their business rather than
protecting themselves. Of course, it is important to ensure that your business is thriving, but
what would happen if something were to happen to you?
What would you do if you had to leave work for an extended period of time due to an injury
or a serious illness? You may have business insurance, but how would you pay bills and take
care of your family?
Protecting yourself should not be an afterthought. Insurance policies that are taken out on
behalf of your business just protect your business and not yourself.
Consider getting income protection, as it makes sure that your finances are protected,
meaning you are able to continue providing for your family if anything such as illness were
to occur. Read on to find out more about income protection, and why it is a great idea for
small business owners.
What Is Income Protection?
Income protection is a type of insurance policy that provides you with a regular income if
you cannot work. It pays between 50-70% of your income and continues until you either
return to work or retire. This means that paying out for essential expenses will be less of a
worry for you whilst you are not working.
The amount of cover you require will depend on a few different factors, such as…
The conditions you would like your policy to cover
Any loans you have taken out
Your share of the business’ profits (generated before tax)
Although you may be eligible to receive financial support from the Government through the
Employment and Support Allowance, there is no guarantee that you will qualify for this.
There is also no guarantee that the amount of money you receive from the Government (if
any) will be enough to cover your essential expenses, and it will usually be much less than
income protection.
Keeping that in mind, income protection is certainly worth considering if you are a small
business owner.
What Does Income Protection Insurance Cover?
What the income protection insurance covers will depend on the range of illnesses/injuries
that you chose it to cover when you purchased the policy.
The majority of income protection policies cover the most common health conditions that
leave people out of work, such as cancer, stress, back problems, or heart disease. It is worth
noting that income protection does not cover any pre-existing conditions or conditions
linked to or caused by alcohol, drug misuse, cosmetic surgery, redundancy or criminal
activity.
Is Income Protection Right For Me?
Despite income protection being a good option for many small business owners, whether it
is right for you ultimately depends on your personal circumstances.
A few examples of situations where income protection may not be needed include…
If you have an existing mortgage/insurance policy that covers illness and injury.
If you have personal savings that could support you and cover your essential expenses whilst you are not working.
If Government benefits are enough to get you by.
If you have a partner or family member for supporting you, eg if your partner earns enough income to cover everything that you both need.
If you have the option to take early retirement.
If you are considering using your savings to get you by, bear in mind that these may have to
last you a long time. You should also consider how you would cover your expenses if your
condition worsens or continues for longer than expected.
With income protection, if the worst-case scenario were to happen, you wouldn’t have to
rely on your savings. This will give you peace of mind, as it is always a good idea to have a
backup plan.
The Bottom Line
Even if you are the only person that depends on your income, you should consider having a
look at income protection insurance. Knowing that you can keep life ticking over if you fall
seriously ill or injured can really put your mind at ease. Being a small business owner, it is
always a wise choice to plan before any of these situations occur.
Thank you for reading our article; we hope you found it informative. We have
many other articles discussing small businesses, so consider giving them a read also if you
have enjoyed this one.