If you own your own business then you will be acutely aware that the wellbeing of your company is closely tied to your own health. Critical illness insurance is vital to enable your business to survive when you need to step down for medical reasons.

As the owner of a small to medium-sized business, you will appreciate how important you are to the day-to-day operation of your company. The smooth running of your business, your own income, and possibly that of a number of employees, are dependent on your own health and ability to continue in your role. Unfortunately, unforeseen events do occur, including disability and serious illness. Critical illness insurance provides cover for medical conditions that would mean you are no longer able to run your business, potentially threatening its continued operation.

What is critical illness insurance?

Critical illness insurance is distinct from life insurance, although it can often be combined on the same policy. Life insurance pays out if you die within the term of the policy. In contrast, critical illness cover only pays out if you survive a life-changing illness. The definitions of this differ from provider to provider, but they generally include a broad range of conditions that seriously affect your quality of life and ability to work. Cancer, heart attack, stroke, blindness, deafness, multiple sclerosis and kidney failure are all examples of illnesses that are typically included by insurers.

As a business owner, such an illness doesn’t just threaten your own health and income. It also threatens your company and the livelihoods of any employees you might have. The unique pressures of running your own business mean that you will no doubt have worked through minor ailments in the past, where others might have taken the day off. Critical illness insurance caters for those times when you have no choice but to stop. Because they are central to the continued operation of the company, there may be other key employees to whom you also offer it as a benefit. In some cases, this can be offset against tax.

Uses of critical illness insurance

Critical illness cover of some sort is often a good idea, whatever your employment status. Whether you are self-employed or work for a company, if you suffer from a serious medical complaint you will have the same concerns. You will need to pay for your regular outgoings – rent or mortgage, utility bills, food, and other living expenses. You may also need private medical care.

If you own a business, there are other uses to which you can put the tax-free lump sum you are paid in the event of a claim. Since you are so critical to the company, you can use it to buy some time as you put other measures in place in the transition to either bringing someone else on board or selling the business. This might entail hiring or training a replacement. Alternatively, you might use the money to pay off debts that would otherwise drag the business down.

Conclusion

Critical illness insurance is a key requirement for business owners, since the health of the company is so closely tied to your own. A significant proportion of the population will suffer from a critical illness before retirement age, with cancer, heart disease and strokes being three of the most common examples. These have significant costs of their own if you can no longer work, but if your business is heavily dependent on you then there are further impacts to consider. Appropriate insurance can reduce the risks to your company and give you breathing space to make the necessary arrangements.

If you are in any doubt about your requirements, you should consult with an experienced insurance broker. Critical illness insurance can often be added to the same policy as life insurance, and both are often necessary. Combining them in this way is frequently cheaper than purchasing two separate policies.

This article was supplied by the leading firm of Irish insurance brokers, Robertson Low, established in 1995 and the only Irish incorporated "Lloyd's broker"