Many people think about planning for what happens if they pass away unexpectedly—but far fewer prepare for something that’s even more likely: a disability that prevents them from working.
Statistics show that one in four adults will experience a disability before retirement age. In fact, disability is far more likely than an early death, yet many individuals fail to plan for it. A serious illness, injury, or chronic condition could take you out of work for months or even permanently, putting your financial stability and business at risk.
If you’re a business owner or a key leader, your absence doesn’t just affect you—it impacts your employees, customers, and overall operations. Without a plan in place, your sudden inability to work could create uncertainty, disrupt your business, and put a financial strain on both your company and your loved ones.
The Risks of Not Planning for Disability
A disability doesn’t just affect your health—it can cause major financial and business challenges. Some of the most common risks include:
- Financial Strain: A sudden loss of income, coupled with medical bills and additional care costs, can put immense pressure on your savings and long-term financial plans.
- Business Instability: If you own a business, who will take over your responsibilities? Without a plan, leadership gaps can lead to lost revenue and operational disruptions.
- Decision-Making Delays: Without clear delegation, important financial and business decisions may be postponed, affecting long-term growth and sustainability.
- Declining Business Valuation: If you’re unable to return to work and there’s no continuity plan, your business may lose value, making it harder to sell or attract investors.
Since disability is statistically more likely than an early death, it makes sense to plan for both scenarios with equal urgency. Failing to do so could leave your family, employees, or business partners scrambling for solutions at a time when stability is most needed.
How to Protect Yourself and Your Business
The good news? With proactive planning, you can create a safety net that ensures financial security and business continuity, even if a disability keeps you from working. Here’s how:
- Establish a Personal and Business Continuity Plan
If you were unable to work starting tomorrow, what would happen? A continuity plan helps answer that question. It outlines who will step in to manage your personal and professional responsibilities to keep things running smoothly.
- Get Disability Insurance
Because disability is more likely than premature death, it’s crucial to prioritize disability insurance just as much as life insurance. There are two key types:
- Short-Term Disability Insurance: Covers lost income for a few months after an injury or illness.
- Long-Term Disability Insurance: Provides income for extended periods, sometimes until retirement.
For business owners, Business Overhead Expense Insurance can help cover fixed costs like rent, payroll, and utilities if you’re unable to work.
However, be careful when signing up for plans just for the purpose of being covered. Choosing the right insurance coverage is a balancing act—you need enough protection to safeguard your income, family, and business without overspending on unnecessary policies. Not all disability insurance plans are created equal, and the fine print matters. Carefully evaluate factors such as coverage duration, waiting periods, benefit amounts, and exclusions to ensure the policy aligns with your specific needs. Over-insuring can drain resources, while under-insuring can leave you financially vulnerable.
- Consider Key Person Disability Insurance
If you are a vital part of your business, key person disability insurance ensures your company receives financial support while adjusting to your absence. This can help keep operations running and prevent revenue losses.
- Have a Buy-Sell Agreement with Disability Provisions
If you have business partners, a buy-sell agreement determines what happens if you become disabled. This agreement can outline:
- Who takes over your ownership stake
- How a buyout would be funded (often through disability insurance)
- How decisions will be made moving forward
This ensures stability for both you and your business.
- Communicate and Prepare Your Team
Whether it’s your family or employees, those who depend on you should know what to do in case you can’t manage your responsibilities. Having clear conversations and updating your continuity plan regularly ensures everyone is prepared.
Taking Control of the Unexpected
Disability isn’t something we like to think about, but it’s far more likely than an early death, and the consequences can be just as severe. Preparing for disability is not about expecting the worst—it’s about ensuring that you, your loved ones, and your business are financially secure, no matter what happens.
At BlueSky Wealth Advisors, we help individuals and business owners prepare for the unexpected. From disability insurance to business succession planning, we’ll work with you to create a strategy that ensures your family and business are protected.
The best time to plan is now. Let’s get you prepared.
