Being a self-employed business owner is exciting but also comes with its own unique challenges especially when it comes to managing finances.
Without the employment benefits and financial stability of being an employee, managing your financial risk is very crucial if you’re a freelance professional or self-employed.
This post covers 3 of the crucial insurance products that every self-employed Canadian should consider getting to protect their finances and that of their loved ones.
Next, it provides a Bounc3 review. Bounc3 is an online insurance broker that is making is simple for self-employed and business owners in Canada to get the insurance coverage they need.
Best Insurance Products for Self-employed Canadians
If your death would leave your loved ones and business in a financial mess, then you should consider protecting them with a life insurance policy.
Life insurance is a contract between an insurance company and the insured. It pays a lump sum benefit to your beneficiaries in the event of a premature death.
In exchange, you’ll be required to pay regular (e.g. monthly) premiums to the life insurance company.
Types of Life Insurance
In general, there are two types of life insurance: term life insurance and permanent life insurance.
With term life insurance policies, you’re protected for an agreed length of time, e.g. 10, 15, 20 years. Your loved ones will only receive the insurance payout if you were to become deceased during the term specified in the insurance contract.
In other words, the contract expires after the term, and you’ll need to get another life insurance policy to continue to get protected.
But with permanent life insurance, there are no expiry dates, and you’ll continue to be protected for as long as you continue to make the regular premium payments.
The permanent coverage sounds like a great deal on paper, but they are much more expensive than comparable term life insurance policies.
Read more: Guide to Canadian Life Insurance
How much life insurance coverage do you need?
One important decision you’ll need to make when getting life insurance is the coverage amount.
A quick and easy way to estimate how much life insurance to buy is the income replacement approach. You simply take your annual income and multiply it by the number of years you want to replace it for your family.
Here’s an illustration:
Let’s say you earn $100,000 and believe your family will still need the income for another 5 years after you’re out of the picture. Your life insurance amount would be $500,000.
A more accurate approach is to itemize and sum up all your current financial obligations (e.g. mortgage and monthly family expenses) and future obligations like children’s educations.
Then deduct your savings and investments for the figure to get an estimate of the coverage you need.
A good tip is to get just enough coverage for your needs. While it may be tempting to get a higher coverage, remember you’ll be paying more for it.
Critical Illness Insurance
Another crucial insurance product to consider as a self-employed is critical illness insurance.
Critical illness insurance protects you financially if you are diagnosed with a serious medical condition that prevents you from working.
It pays a lump-sum, tax-free amount that can be used anyhow you like – to cover some of your medical expenses, monthly expenses and so on.
The medical conditions covered by a critical illness insurance will vary from one contract to another. But common illnesses include strokes, heart attacks, cancer, kidney failure and many more.
You should review the medical conditions covered before signing the contract.
How much critical illness insurance do you need?
A good rule of thumb is to get enough coverage that covers your net salary for a year. Depending on the medical condition, this could be more than you need or less.
In any case, it’ll help you maintain financial stability for some months during the challenging times.
You should also consider your savings (e.g. emergency fund) when calculating how much critical illness insurance to buy.
For example, your critical illness insurance need is much lower if you have an emergency fund that covers 6 months of your expenses than if you have no savings.
Disability insurance protects you in the event that you’re temporarily or permanently unable to work due to an illness or injury.
It pays a tax-free monthly recurring amount that replaces a portion of your income so that you can continue to cover your personal or business related expenses.
Unlike a critical illness insurance that makes a lump-sum payment if you developed a serious medical condition, disability insurance payouts are made monthly.
Getting disability insurance is very important if you’re self-employed and your finances would suffer if you’re unable to work for a few years.
So how much disability insurance should you get?
Like life insurance and critical illness insurance, the answer depends on your specific financial circumstances.
But at a minimum, you should buy enough insurance to cover your monthly financial commitments like mortgage or rent, utilities, debt and other important bills.
Where to Buy Insurance as a Self-employed or Business Owner in Canada?
There are several insurance companies in Canada to choose from when you’re ready to get any of the insurance products above.
But if you’re a freelancer, small business owner etc, then Bounc3 is a great choice and should be the starting point when you’re shopping for the right coverage to protect yourself.
Bounc3 was founded to address the specific insurance needs of self-employed Canadians. It is an online insurance broker that provides affordable insurance products that are tailored to the needs of the self-employed individuals.
The platform is built to provide guidance from licensed insurance brokers to help you decide on the right insurance for your needs.
It also gives you access to insurance quotes from some of the most reputable insurance companies in Canada and lets you apply for the policies online in minutes.
Some of the biggest insurance carriers on Bounc3 include RBC Insurance and Manulife.
How does Bounc3 work?
Getting started with Bounc3 is simple, easy and straightforward.
Here’s are the few quick steps on how Bounc3 works
- Browse the insurance products and select one
- Provide some of your information to get an instant quote
- Apply online for coverage
Everything is online so no need for long paperwork to get the coverage you need for yourself and your loved ones.
Click here to get started with Bounc3 and get a quick quote to start protecting your loved ones and your business.