As many self-employed women can attest, running their own business can be a balancing act.
Between trying to grow the company, managing finances, and even keeping up with family responsibilities, juggling it all can be both difficult and rewarding.
For your clients who are both women and small-business owners, having built something from the ground up that they can truly call their own is just part of the story.
It's also important for them to recognize that their ability to work is what keeps it all running smoothly.
But what happens if an illness or injury takes your client out of the picture, even for a little while?
Unlike employees at large companies who often have disability benefits built into their compensation, those who are self-employed — especially women — are more financially vulnerable when unexpected health issues arise.
That's why, as their financial professional, it's important to be sure clients understand that disability insurance isn't just another expense. It's a critical component of their financial strategy that helps ensure their business and income can continue even if they can't work.
Did you know:
◆ More than 4 in 10 women (41%) say they're concerned about having a long-term financial plan. (Guardian).
◆ Women are more likely than men to step away from work for caregiving or health-related reasons. (Federal Reserve Bank of Minneapolis).
◆ About 25% of working Americans will experience a disability before retirement. (Social Security Administration).
◆ Over 60% of bankruptcies in the U.S. are tied to medical expenses. (Himmelstein & Lawless)
◆ 53% of U.S. adults say they're "struggling to keep up" or just "making ends meet" financially. (Guardian)
Disabilities can and do happen more often and to more people than is commonly thought.
And because your client's income as a small-business owner isn't guaranteed like a corporate salary may be, a serious illness or injury could put everything she has built at risk.
That's why helping clients establish a solid financial strategy that includes disability insurance can help make a difference.
So, what is disability insurance, and why should your clients consider it?
As many financial professionals know, disability insurance is income protection — it replaces a portion of your client's earnings if they're unable to work due to illness or injury.
There are two main types of disability insurance.
Short-term disability insurance covers a percentage of an individual's income for a few months (typically up to six months).
Long-term disability insurance provides financial support for an extended period, sometimes even up until retirement age.
Why Do Female Entrepreneurs Need Disability Insurance?
1. Their business and income depend on them.
Think about it — if your client is not working, who's generating revenue for her business? If an illness or injury sidelines your client, her earnings could take a major hit.
Disability insurance helps replace lost income, so her financial stability doesn't disappear overnight.
2. They shouldn't rely on savings alone.
Many women who own businesses may think that their savings can provide a good financial cushion if something happens.
But could they afford six months or more without an income? A disability insurance policy helps ensure they have steady cash flow without draining their savings.
3. It can help cover business expenses.
Some disability insurance policies offer overhead expense coverage, which can help pay for expenses that keep the business running, such as rent or mortgage payments, employee salaries, utilities, and loan payments.
4. Health issues can happen to anyone.
Most people think disabilities are caused by accidents, but the reality is that the majority of long-term disabilities come from illnesses like cancer, heart disease, or mental health conditions.
How to Pick the Right Disability Insurance Policy
If your client is considering disability insurance, here are a few key things to keep in mind as you work to find the best policy for her:
1. Determine the right amount of coverage for your client's needs.
Aim to replace 60% to 70% of their income with the policy.
Since disability benefits are often income tax-free, this should be enough to cover essential expenses.
2. Consider both short-term and long-term disability insurance.
Many business owners include both to ensure complete coverage.
However, here are the main aspects to keep in mind when deciding:
◆ STD insurance helps with temporary issues like pregnancy complications or surgery recovery.
◆ LTD insurance protects against serious illnesses or injuries that could last years.
3. Discuss overhead expense insurance.
If your client has fixed costs such as rent or payroll, look for a policy that includes OE insurance to keep things running.
4. Explain the elimination period.
The elimination period is the time a policyholder has to wait before receiving benefits.
Policies with shorter waiting periods start paying sooner, but they may have higher premiums.
Help Your Clients Protect Themselves and Their Business
As a self-employed woman, your client has worked hard to build her business, brand, and financial independence.
But all of that depends on her ability to work.
Without disability insurance, one unexpected health issue could derail everything — but you can help your clients protect themselves and their careers.
Disability insurance isn't just about protecting your clients' income; it's about protecting their future, keeping their business afloat, and giving them financial confidence.
Now is the time to prioritize income protection to help ensure your clients' financial fitness.
Taking the time to set up disability insurance today could be the best financial decision your clients ever make.
Harry Monti is head of individual disability and multi-life at Guardian.
Credit: Adobe Stock
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.