This is not a trick question and for those who are Small to Medium Enterprise’s (SME) and are running a small business this question will often keep them awake at night.
When you are self-employed the ‘what can go wrong LIST’, is a long list.
Income protection is designed to protect you in case you are unable to work and earn an income due to a serious injury, accident, or illness. Most people who are in the prime of their lives, with good health and a flourishing business, do not think that they need income protection. It is mainly established by people who have debt or family dependents.
People often insure their car worth $40,000 – $50,000 or insure the home and contents but not everybody will insure their ability to earn an income. The average wage is $60,000 -$75,000 a year however, over a working life up to age 65, with inflation the ability to work is worth almost $4 million – It would certainly make sense to insure this.
People who are self-employed consider their income protection even more important but it becomes more complex, policies that do not have particular wording for a self-employed person will not be beneficial, but an insurance policy that has particular wording for self-employed people is essential.