The importance of securing income for self-employed

The importance of securing income for self-employed

Self-employed individuals may find themselves in financial risk without income protection insurance. After all, if you are the only operator of your business, then there is no one to keep things running if you suddenly can't get to work. If the business does not run, what source of income will you get?

Income Protection will provide you with a steady source of income in the event that you are unable to work due to illness or injury. Accidents and illness can happen to anyone at any time. By comparing income protection plans, you can learn about the many options available to you in order to choose the policy that best suits your needs and budget.

Income Protection for Self-Employed Individuals provides coverage of up to 75 percent of the company's total distributable income paid to you or a relative of the company's net pre-tax income, including any retirement contributions of you or your relatives. An income protection plan can provide you with a continuous income in the event that you are unable to work due to illness or injury. There are also many options available within your policy, so it makes sense to choose options that are relevant to your career and lifestyle.

You can also choose between an agreed value policy and a compensation policy. With an agreed value policy, proof of your income allows you to insure yourself for a specified amount of money, which is beneficial because you will know exactly how much you will get if you are unable to work due to illness or injury, even if the income changes after purchasing the policy. . However, an agreed value policy usually costs more than a compensation policy.

The compensation policy allows you to secure your income for any declared amount. However, when it comes time to file a claim, you will be required to verify your income. The insurance premium on a compensation policy is usually lower than the agreed value policy.

You can also choose between Stepped Premium and Level Premium. A tiered premium, calculated at each anniversary of your document at your current age. Tiered premiums are increased every year, and the rate of increase becomes greater as you age.

However, the premium level is fixed on a fixed amount and will only change if you make any changes to the general price levels while you own the document. During the first few years after you purchase the level premium policy, your rates will likely be higher than those of the tiered premium, but the savings over time can be substantial as long as you maintain the policy.

Keep in mind that you will need to consider the waiting period and benefit period for each plan you review when choosing the option that best suits your needs. Not only will this affect the cost of your income protection premium, it can affect whether you actually receive your benefits when you need them. For example, if you can manage for three months without income, you can reduce about a third of the cost from your premium by agreeing to a 90-day waiting period to receive benefits after you file a claim.