Why Critical Illness Insurance for Small Business Owners is Important

By: Updated: August 9, 2016


As a small business owner, you work dramatically longer hours than most and tend to take less vacation time. As such, a twisted ankle or some back pain is not a serious enough situation for you to be off work.

However being diagnosed with cancer or suffering from an unexpected heart attack will definitely affect how much time you spend growing your business. This is where a Critical Illness Insurance policy can be one of the most valuable insurance policies you own.

Many small business owners have protected their families and the succession of their business with life insurance yet few have protected themselves or their families in the event of a serious and unexpected medical condition.

You are much more likely to experience a critical illness than die before age 65. In fact, the average age of a claimant for critical illness in Canada is only 42.

You may have some disability insurance, however it can be a challenge to collect benefits due to the fact you generally cannot be working and few small business owners have adequate replacement of their total income. Critical Illness can help in these circumstances.

Unlike life insurance, critical illness insurance pays a benefit to you. You decide the amount of coverage you want, say, for example, $100,000. The benefit is paid out on a tax-free basis if you suffered from a serious and covered medical condition (such as a heart attack, cancer, stroke or various other illnesses/injuries) and survive (on average) 30 days after diagnosis.

These tax-free funds can be used any way you wish. Perhaps you may need to hire a temporary Manager to help run the business in your absence or cover some of the monthly expenses such as equipment loans and leases. One of the best features of critical illness insurance is that the payout is not affected by your ability to work – you have the choice to work as much or as little as you want.

Is Critical Illness Insurance expensive? Not considering the risk. Your odds of winning the 6/49 lottery is roughly 1 in 14 million! Did you know if you if you are over 40, the chances of developing coronary heart disease in your lifetime are 1 in 2 if you are a man and 1 in 3 if you are a woman? The odds of developing a cancer for either sex are also 1 in 3. Once you are over the age 50 and up to age 75 there is a greater chance of having a critical illness than dying and the majority of this group will recover.

For a business owner at age 43, the monthly premiums for a $100,000 Critical Illness policy could be as low as $60 a month. What’s better is there likely is a way in which this person's company can pay for the premiums while still having the benefit paid out tax-free. The business owner may even consider purchasing a policy which would return all the premiums paid in the event a claim never occurs.

If you suffer a serious illness, why would you want to use your money to cover your business and medical expenses? Use the insurance company's money instead!

Perhaps it is time to consider how well your family and your business could cope financially if you suffered a serious illness or injury. Life insurance provides financial protection if you die. Who provides financial protection if you suffer something serious and live?

It's clear that critical illness insurance for small business owners is a very important and smart investment.

Interested in learning more about Critical Illness Insurance and how it can protect you and your family? Download our free ebook: The Beginner's Guide to Critical Illness Insurance.

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