If you’re self-employed and earning a strong income, chances are you’ve worked incredibly hard to build a life and business that you love. You’ve likely invested in tools, teams, and strategies to protect and grow your business. But let me ask you this: what happens if you suddenly can’t work?
It’s not a fun question, and it’s one that’s easy to push aside. But life happens. An unexpected illness, injury, or accident can knock us off our feet. And when you’re self-employed, there’s no built-in safety net. I’ve heard too many heartbreaking stories of hardworking realtors and small business owners who faced a major life event unprepared. Despite their talent, grit, and planning, they found themselves in financial freefall when their ability to earn was suddenly taken away.
I didn’t fully understand the importance of private long-term disability insurance myself until recently. I mean, I knew it existed, but as a self-employed high earner, I hadn’t given it serious thought. Turns out, it’s one of the most critical pieces of financial planning that we often overlook.
Why Long-Term Disability Insurance Matters
If you’ve built your life around your ability to earn, you need a way to protect that income. Unlike employees in traditional roles, we don’t have an employer offering us a disability insurance plan as part of a benefits package. Sure, you might have savings or investments, but how long will they last if you’re unable to work for six months, a year, or longer? And would you really want to burn through the assets you’ve worked so hard to build?
That’s where private long-term disability insurance comes in. It’s designed to replace a portion of your income if you’re unable to work for an extended period of time due to a disability. Think of it as an investment in your future self—the one who might need a lifeline to get through a tough chapter.
Questions to Ask Yourself
Before you dive into researching policies, it’s helpful to ask yourself a few key questions:
- If I couldn’t work for six months or a year, how would I cover my personal and business expenses?
- Do I have dependents or family members relying on my income?
- How much of a financial cushion do I currently have, and how long would it last in the event of a major life event?
- Am I willing to take the financial risk of being uninsured, or would I rather pay for peace of mind?
Questions to Ask Your Insurance Broker
When you’re ready to explore your options, here are some questions to bring to the conversation with an insurance broker:
- How much income will the policy replace? Look for policies that replace 50-70% of your income.
- How long will the benefits last? Some policies cover you until retirement age, while others have shorter timeframes.
- What’s the waiting period? Policies often have a waiting period (e.g., 90 days) before benefits kick in. Make sure you understand this timeline.
- Does the policy cover my specific occupation? Some policies are tailored to your ability to perform your current job, while others are broader and apply to any work.
- Are there exclusions or limitations? Find out if there are any health conditions or scenarios that the policy doesn’t cover.
- Can I adjust the policy as my income grows? Flexibility is key as your business and financial situation evolve.
Don’t Leave It to Chance
You’ve worked too hard to build your life and business to let it all hinge on the hope that nothing unexpected happens. Long-term disability insurance might not be the most exciting topic, but it’s one of the smartest investments you can make in your future.
If this has you thinking, take the next step. Research your options, talk to a trusted advisor, and make a plan. For a deeper dive into the topic, I highly recommend listening to The Money with Katie Show podcast episode, “The Critical Insurance Many High Earners Don’t Realize They’re Missing.” It’s an eye-opening resource that breaks this down in a relatable way.
Because at the end of the day, protecting your income is about more than just money—it’s about safeguarding the life you’ve worked so hard to create.