You consider yourself a risk taker and an adventurer. That’s good. Otherwise, you wouldn’t be willing to put everything you have into that new start-up.
Yet at the same time, there is no point in taking unnecessary risks that could come back to haunt you in the future. One such risk is continuing to operate your new business without any personal insurance in place.
Every start-up goes through its ups and downs. Every entrepreneur experiences certain things that could lead to significant financial loss. The point of having personal insurance in place is to protect yourself and your finances in the event something goes wrong.
Being the owner of a start-up, you are essentially a self-employed individual with no one but yourself to lean on for your financial success. You do not have access to company benefits.
You do not have access to many of the safety nets employers put in place to protect their workers. It is just you alone.
If you have never considered personal insurance before, you probably should give it some thought. Below are six kinds of personal insurance and one form of business insurance that every start-up owner should have.
1. Income Protection
Income protection is a form of insurance intended to replace lost income as a result of injury, illness, or other specific circumstances. You can purchase both short- and long-term cover for a variety of scenarios. The one thing income protection does not generally cover is loss due to critical illness.
As a self-employed business owner, any circumstance that would result in loss of income could be devastating to both your personal finances and the success of your business.
If you are like most self-employed people, you are funding your business out of your own pocket. You cannot afford lost income under any circumstances.
Imagine being injured in some sort of accident outside of work. The injury isn’t serious, but it will prevent you from conducting business as normal for up to a month. Income protection keeps the money coming in while you recover, allowing you to devote all your energy to getting better so that you can get back to business.
2. Critical Illness
This sort of insurance cover is made available in the event that you should ever be diagnosed with an illness as critical as cancer, heart attack, stroke, etc. Rather than paying at regular intervals, like income, critical illness cover pays out a single lump sum to satisfy a claim.
Being diagnosed with a critical illness is something a lot of people dread. More than the illness itself, they wonder how they are going to get by financially. Being a self-employed business owner, the challenges you would face in the event of a critical illness could be even more daunting without sufficient income.
3. Personal Liability Insurance
Depending on how old your business is and what you are involved in, you may already have a business liability policy. A personal liability policy is still a good idea as well.
Personal liability cover pays out claims made against you in the event that you are found liable for someone else’s injury outside of the business setting.
Why is this important to the self-employed?
Because your business assets could still be at risk in the event of a personal liability claim. At the same time, your personal liability coverage will pay a claim made against you outside of your business. Personal liability insurance just ties up those loose ends so that your assets are not at risk.
4. Private Medical Insurance
As an entrepreneur and the owner of a successful start-up, you know how important it is for you to manage your time wisely. You may not have time to deal with the NHS when you have a medical issue. But seeking private medical care is usually not an option unless you have private medical insurance.
Private medical insurance allows you to seek healthcare services on your schedule. And as a small business owner, that is a necessity for you rather than a convenience. Being able to utilize private healthcare will minimize lost work time if you do get ill.
5. Life Insurance
Replacing lost income in the event of your death is the point behind having life insurance in place. As an added bonus, life insurance will also cover the costs of your funeral and burial.
Not having such insurance could mean your business assets are liquidated in order to provide the necessary funds your family needs. Why put them through that?
A life insurance policy will provide a lump sum payment that gives your family time to figure out what is best. They may decide to keep your business going, or they may decide to sell it or close it down. Either way, they will have choices. They will not have to liquidate your business out of financial necessity.
6. Household Insurance
Last but not least, you should seriously consider household insurance if you run your business from your home. Why? Because standard home insurance policies may cover your business assets, but it is unlikely to cover liability.
This is definitely an insurance product you should have in place if you do not carry business liability insurance.
Note that you should probably call your home insurance provider and speak to them about your current business operations. Depending on what you do and the scope of your business, they may agree to cover liability without altering your policy or requiring you to buy a new one.
But if they won’t, you’ll have to cover yourself with some form of specialised household insurance that covers business liability.
You are willing to take chances to build a successful business that will support you and your family for a lifetime. Good for you. But not every chance you take is one you should take. That includes continuing to operate as a self-employed start-up owner without appropriate insurance protection.
Please do yourself, your family, and your business a favour by looking into the six forms of insurance for the self-employed described here.