Self-employed professionals face unique challenges and opportunities compared to employed individuals. There are distinct differences between their goals, and in the same way their insurance needs are also different. In this second article of a two-part series, we explore the unique insurance needs of self-employed professionals.
INSURANCE NEEDS UNIQUE TO SELF-EMPLOYED PEOPLE
One key insurance implication for self-employed professionals is that, unlike corporate employed professionals who may belong to a group benefit scheme, they must take sole responsibility for ensuring that their retirement and risk benefits are adequately catered for. It is vital that they should consider a retirement option as well as risk insurance with among other things income protection and life cover as part of their financial plan.
Self-employed individuals are responsible for any expenses connected to the business – including their employees’ salaries. If these people fall ill, suffer an.injury or become physically challenged, they do not have the luxury of getting paid-for sick leave. Therefore they need appropriate income protection cover that will pay a sickness benefit to replace their earnings and cover business expenses to keep their business running if they are not able to continue with daily business activities.
Self-employed professionals also have to consider business assurance to ensure proper business succession planning. Buy-and-sell insurance, for example, plays a key role when business owners want to ensure that their business shares are sold to a specific person or group of people at a fair value. Key-person insurance should also be considered to protect the business against the impact of the loss of a person who adds critical value to the business.
Self-employed professionals should ask their financial planners the following questions:
Does my policy cover my full income including actual business expenses?
How much life cover do I need to provide for my family, debt, or other financial planning needs?
Do I need any business assurance (based on agreements/loans/individuals in my business)?
Author: Tiffany Boesch CA(SA) is group financial director of PPS
