So, there you are, running your own successful and growing business. You have an excellent customer base, a top notch product or service offering and a healthy sales pipeline. All in all, you have everything to look forward to, thank you very much!.
But, most importantly, you know that the key ingredient in your success story, is your own presence, attention to detail, and the fact that you are the key driver behind your business success.
This is essentially what your customers have bought into.
Then one day, out of the blue, you get sick or have an accident or whatever. You are out of your business equation.
Two issues spring to mind. Firstly, who will service your customers needs? And secondly, what will you live on during your absence from the business?
The chances are, in the first situation, your customers will go elsewhere with their business. After all, you are of course a nice person, but business is business!. There are plenty of other fish in the sea.
In the second case (your income), because you are a Sole Trader or Company Director, you will NOT qualify for Social Welfare disability benefit, due to the fact that you pay PRSI at Class S.
So, how do you pay your bills?
Draw up a list of your key monthly outgoings. What would it mean if you could no longer service your bills?
What would you stand to lose? Your Business, car(s), Home? Etc. etc.
But there two major ways to mitigate these risks:
- plan to prepare your business for the event
- insure the risk of the event occuring.
The business should strategically plan for the event where it has to run on autopilot while the managing director or key person is unavailable.
Strategic planning prepares the business for growth, profitability and survivability. It is not a simple exercise, but without some form of strategic planning a business will suffocate, be takenover or die. Thus your income will dry up.
In terms of the Business risk you could takeout Key Person Insurance, and in relation to your Income, you could take out a PHI (Permanent Health Insurance) or Income Protection policy.
Key Person Insurance is a policy wich will provide the finance to a business to enable it to employ a manager while it's managing director (key person) is incapacitated for any reason and unable to take an active part in the business in the short or medium term.
PHI Income protection policies can be arranged through your Broker, and typically have a claim deferral period of 13-26 weeks before benefits can be paid. Most providers will accept risk up to 75% of certified income less any Social Welfare benefits which may be payable. Cover age is usual to ages 55, 60, or 65 with higher ages attracting higher premiums. Policies are subject to Medical and Financial underwriting requirements.
For self-employed persons, this type of insurance is highly recommended.
Contact your Broker or Financial Advisor for further advice.
Note: The above comments are solely the author’s opinions, and no responsibility is taken for any errors or omissions therein.
