Insurance (Because life isn’t perfect)


By Helen Hirsh Spence and Debra Yearwood

No one likes talking about insurance. Insurance brings to mind things gone wrong, plans disrupted or processes corrupted. Insurance coverage is also what will get you through all kinds of unanticipated upheavals with the minimum of fuss. Think about insurance as a backup plan, a safety valve or an additional exit. Insurance may also be the difference between a business taking a pause and a business closing.

Insurance Options

Many small business people think they don’t need insurance. Unless the business has obvious assets like buildings, equipment or supplies, insurance can seem like an added and unnecessary cost. But what happens when things impact employees? What happens if you lose a key individual at a critical juncture in the life of your business?

What contingency plans do you have in place to ensure the viability of the business? What about sickness as a sole proprietor? Will your business be able to survive without you? Will you survive financially not being able to work? These are questions that insurance will help you address.

Disability Insurance for the Self-Employed

Disability insurance can provide you with income, overhead coverage, pay the interest on bank loans and pay deferred income taxes if you should suddenly become ill or if you have a debilitating condition. Disability insurance can be accessed through a number of methods: individual plans organized through a life insurance agent; group insurance accessed through an association or chamber of commerce; and special purpose plans that provide a one-time lump sum payment.

Critical Illness Insurance

Critical illness insurance covers the costs associated with a life-altering illness. The coverage generally allows you to spend the one-time lump sum payment in whatever way you deem appropriate.

Partnership Insurance/ Buy Sell Insurance

This insurance provides a cash payment that other owners can use to buy a deceased or severely disabled partner’s shares in a company. This insurance should be part of a buy/sell agreement between partners.

Key Person Insurance

If your organization relies on a particular employee or employees to operate, this life insurance is intended to allow your business to continue should that person die. This coverage can help the business to keep running while a suitable replacement is found and trained.

Life Insurance
Basic life insurance means that your family is protected should something happen to you. This includes any business costs which are treated as personal debt with a sole proprietor.

Business Interruption Insurance
This insurance coverage covers the loss of income for a business in situations where catastrophic events cause the business to close or cease operations for a period of time. Business Interruption Insurance can cover costs while a business completes repairs after a fire, water damage, etc. Different policies provide different coverage. Speak to your insurance agent to understand what your options are.

Other Coverage
In addition to the insurance coverage mentioned above, there are also policies that cover accounts receivable, health, property, content and vehicles. Every business has its specific requirements and coverage can be determined by consulting the appropriate insurance expert for advice. Remember, don’t forget about your insurance needs!

Cautionary Note: Although the Ontario Human Rights Commission has advised against excluding benefit plans using age as criteria, the practice persists and isn’t considered illegal. This means that despite the fact that life expectancy now sits at 84, many plans are not available for those over 60 or 65.