Self-Employed Disability Insurance – Protection for Business Owners

Self Employed Disability Insurance – Protection for Business Owners


There are a number of advantages to being your own boss. The freedom to set your own schedule, control over client and business relationships along with a feeling of liberation are a few of the main reasons increased numbers of Canadians are headed down the self-employment path. Self-employment does come with its list of challenges, one being, health insurance and more specifically… disability insurance.

Losing the safety net of an employee benefit program offered by large employers is challenging and sometimes costly. Buying disability insurance through a group plan will have lower rates, no medical exams and no financial underwriting but once you leave the group plan for self-employment, the rules change!

Rates are higher, underwriting wants more details and you may have to go through a medical examination. This new set of hoops to jump through tends be the reason why most self-employed people shy away from obtaining any type of extended health care at all.

It is estimated that 15% of Canada’s work force is self-employed. A recent study showed that more than 500,000 Canadians said they had established their own businesses over the past two years, which is a record number. (CIBC Study, Globe & Mail).

Not setting up the proper disability coverage to protect ones ability to earn an income can have it’s consequences. Disability Insurance will help protect your business (overhead expenses) and family in the event you are unable to go to work, an important building block to consider when you are self-employed.

You may be earning more than you would work for someone else, but what if you get sick? Or are in an accident that leaves you without the ability to earn an income either temporarily or permanently? You will likely have a number of medical expenses, personal expenses and you may not find your accounts payable are as patient as you had hoped. Here is where a well structured disability insurance plan can create a safety net, allowing you to concentrate on returning to good health and take the time away from work that you need.

While most business owners in their 40’s and 50’s are more conscious of their own mortality, there has been a marked increase in the number of entrepreneurs starting their own companies in their 20’s and 30’s. While encouraging for the economy it is important not to forget about the benefits and importance of a well structured disability plan.

A simple question you can ask yourself is: How do you plan to live if you can’t earn an income? Or more accurately, how will you support your dependents, pay your staff, or pay your business overhead if you can no longer earn an income?



Insurance is a contract between an individual or an entity and an insurance company that provides financial protection against potential losses. The individual or entity pays a premium to the insurance company in exchange for coverage in the event of an accident, illness, or other covered loss.

There are many types of insurance, including health insurance, life insurance, auto insurance, homeowner’s insurance, and business insurance. Each type of insurance has specific coverage and exclusions, and the cost of insurance premiums varies based on the level of risk associated with the policyholder.

Health insurance is a type of insurance that provides coverage for medical expenses. It can be purchased by individuals or provided by employers as part of a benefits package. Health insurance policies may cover routine medical care, hospitalization, surgery, prescription drugs, and other medical expenses. The cost of health insurance premiums can vary based on factors such as age, health status, and the level of coverage.

Life insurance provides a payout to beneficiaries in the event of the policyholder’s death. It can provide financial support for loved ones and cover expenses such as funeral costs, outstanding debts, and living expenses. Life insurance policies can be term life insurance, which provides coverage for a specific period of time, or permanent life insurance, which provides coverage for the policyholder’s entire life.

Auto insurance provides coverage for damages and injuries resulting from a car accident. It can include liability coverage, which pays for damages and injuries to others if the policyholder is at fault, as well as collision and comprehensive coverage, which pay for damages to the policyholder’s own vehicle. The cost of auto insurance premiums can vary based on factors such as driving record, age, and the type of vehicle being insured.

Homeowner’s insurance provides coverage for damages to a home and its contents. It can cover damage from natural disasters, such as fire, flood, and storm damage, as well as theft and vandalism. Homeowner’s insurance policies may also include liability coverage, which provides protection if someone is injured on the policyholder’s property. The cost of homeowner’s insurance premiums can vary based on factors such as the age and location of the home, and the value of its contents.

Business insurance provides coverage for businesses against potential losses, including property damage, liability, and loss of income. It can be tailored to meet the specific needs of different types of businesses, such as retail stores, professional services, and construction companies. The cost of business insurance premiums can vary based on factors such as the size and type of the business, the level of risk associated with the industry, and the coverage needed.

In summary, insurance provides financial protection against potential losses, and there are many types of insurance available to meet different needs. The cost of insurance premiums varies based on factors such as the level of risk associated with the policyholder, the type of coverage needed, and the specific terms of the insurance policy. It is important to carefully consider the benefits and costs of insurance before purchasing a policy, and to review and update policies regularly to ensure that coverage remains appropriate and effective.


Self Employed Disability Insurance

Self-employed individuals often do not have access to employer-sponsored disability insurance plans, making it especially important for them to consider purchasing their own disability insurance policy. Disability insurance provides financial protection in the event that an individual becomes disabled and is unable to work, and can help ensure that their income and financial stability are not completely derailed by a disability.

Self-employed disability insurance policies are specifically designed to provide benefits to those who are self-employed, and they can be customized to fit the specific needs of each individual. Some policies may provide benefits for partial disabilities, allowing individuals to continue working in a limited capacity while still receiving benefits. Others may offer coverage for mental health conditions, which can be especially important for those in creative or highly cognitive fields.

When considering a self-employed disability insurance policy, there are several important factors to consider. These may include:

  • Benefit amount: The amount of the benefit provided by the policy can vary, and it is important to choose a benefit level that will provide adequate financial protection in the event of a disability.
  • Waiting period: Disability insurance policies typically have a waiting period before benefits begin, and the length of this waiting period can vary. It is important to choose a waiting period that aligns with the individual’s financial needs and resources.
  • Definition of disability: The definition of disability can vary between policies, and it is important to choose a policy with a definition that aligns with the individual’s occupation and work requirements.
  • Premiums: The cost of premiums for self-employed disability insurance policies can vary, and it is important to choose a policy that is affordable and fits within the individual’s budget.

Self-employed disability insurance policies can be purchased through insurance brokers or directly from insurance companies. It is important to carefully review the policy terms and conditions before purchasing, and to ask questions to ensure a full understanding of the coverage provided.

Overall, self-employed disability insurance can provide important financial protection for those who are self-employed and may not have access to employer-sponsored disability insurance. By carefully considering policy terms and choosing a policy that fits their needs and budget, self-employed individuals can help ensure that they are protected in the event of a disability.

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