Starting your own business can be a very rewarding experience. You’re your own boss, you’re doing what you love, and you’re making money while you’re doing it. While being your own boss does come with plenty of perks, there are some important considerations that you have to keep in mind. When you are first starting out, money might be a little tight, which means you may need to cut a few corners until you start seeing the profits roll in. The one thing you shouldn’t cut corners on, however, is insurance coverage. Here are some of the best types of insurance to have if you are self-employed.
One of the perks of having a regular day job is that most of these positions come with a health insurance plan. When you leave the regular work force and start out on your own, you have to get your own insurance. This is important not just for you, but for your family as well, especially if your spouse does not have health insurance through their job. Health insurance is there to protect you and your family, covering everything from routine medical care to medical emergencies. Having health insurance could save you potentially thousands in the event that something does occur. Although it can be expensive for self employed people there are ways to save on costs.
If you are faced with a serious injury or illness that impacts your ability to work, this can significantly hurt your cash flow, especially if your injury or illness keeps you out of work for several months. Disability insurance is designed to replace the income you lose out on during this time. This can be particularly valuable if you have a spouse and children who depend on you financially. Disability insurance usually only replaces a portion, about 50% to 60%, of your income, so it will be important that you still have an emergency fund in place and spend wisely until you are able to start working again.
Liability insurance is designed to protect you against negligence claims, as well as lawsuits for personal injury and property damage claims. There are a few different types of liability insurance that you can get. General liability covers bodily harm and property damages that are caused as a result of your products or services. Professional liability covers you in the event that someone charges you with negligence or misconduct. Regardless of which policy you chose, having liability insurance is essential for protecting you in the event that these issues arise.
Business insurance is a broad term that involves different insurance types to fill in gaps in your other policies. For example, if you run your business out of your own home, a home-based business insurance policy can provide you with the protection that your homeowner’s or renter’s insurance policy does not. The type of business you run, whether or not you have employees, and where your business is run out of will determine the type of business insurance you need.
If you are married and have children who depend on you financially, a life insurance policy is a must. This type of policy protects your family in the event that something unexpected happens to you by providing them with some financial stability while they recover. When choosing a life insurance plan, you will need to decide whether you want a term life or a whole life policy. A term life policy covers you only for a period of time, such as while your children are young. A whole life policy generally costs more but is designed to cover you for life.
Burial insurance or final expense insurance as it’s known might seem frivolous, but funerals are expensive. If you are older and your children no longer depend on you financially, a life insurance plan may not make much sense. With a burial insurance plan, your family can pay for your funeral and burial costs. The policy can also be tailored to cover the costs of any outstanding debts you might leave behind after you are gone. This type of insurance plan can be a great relief for grieving family members who might not otherwise be able to pay for the expenses associated with funeral services and burial or cremation, taking one less stressor off of their plate.
Having the right kinds of insurance when you are self-employed can help you to save money and prevent a great deal of stress down the road. It can be tough to squeeze them in the budget at first, but the right insurance policies can provide you with peace of mind knowing that you, your family, and your business are protected in the event that something does occur.
Samantha Acuna is a writer based in San Francisco, CA. Her work has been featured in The Huffington Post, Entrepreneur.com, and Yahoo Small Business.