The best insurance for the self-employed

October 16, 2014

Self-employed does not need to mean under insured, but that is often the case in Canada. If you work for yourself, which type of insurance should you have to protect everything you have worked for?

The best insurance for the self-employed

Benefits and being self-employed

It’s true that many employers provide their employees with a wise selection of insurance options within their benefits packages. But when you’re self-employed, you won’t be receiving a packet of paperwork outlining various insurance options—health, life, disability, critical illness, etc. That's why if you’re self-employed and want to be protected from tomorrow’s mishaps, you need to plan today.

Health insurance

If there’s one type of insurance that is on the mind of a self-employed person, it’s probably health insurance. You want to be sure you know what’s going to happen if you get sick and need to go to the doctor for treatment. In Canada, government plans cover a majority of health-related expenses, but it is still wise to purchase a supplement. Many individual health insurance policies are available, and you can purchase coverage for services such as:

  • Prescription drugs
  • Dental services
  • Optometrist services

You may also be able to seek out a national organization or union through which you can get group-discounted prices on policies. If your spouse has access to employer-provided health insurance, it is probably more affordable to be added to your spouse’s plan than to seek out an individual policy.

Disability insurance

Disability insurance is expensive. Is it necessary for the self-employed? If you become disabled and are unable to work, disability insurance provides you with the money necessary to continue your life. It is your safeguard against the unexpected future and enables you to make a living in a worst case scenario.

Many financial professionals recommend this kind of insurance for the self-employed.

Life insurance

Another valuable type of insurance for the self-employed is life insurance. While not as critical for younger business people, you are at some point going to want to have a life insurance policy in place, especially if you have dependants. Financial professionals recommend a policy that is in an amount 8-10 times your annual income.

Critical illness insurance

A newer insurance product, critical illness insurance is becoming a popular choice with the self-employed in Canada. This type of policy provides a lump-sum payout (amounts typically ranging from $50,000 to $2 million) if you are diagnosed with a condition covered under your policy—cancer, heart ailments, or a chronic disease.

Premiums are lower if you establish a policy when younger (under age 40, typically), and you may have an opportunity to lock-in that lower premium.

Prepare for the unexpected

Insurance is important, and as a self-employed Canadian the only one looking out for your future is you. Take the time to research the various types of insurance, or talk to a trusted financial professional about the various options, and purchase policies that set you and your loved ones on a good path for the future.

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