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  • Writer's pictureMichael Klasz

Insurance for Tradespeople: Why Ignoring It Could Cost You Everything

Are you a tradesperson feeling overwhelmed by your insurance options? Guest Blogger Michael Klasz from Starboard Wealth in Halifax, Nova Scotia, is here to help. Discover the essential financial tools you need in your portfolio, not just your toolbox.



At The Project Garage, our mission is to connect people so they can get advice virtually about their renovation projects.


More than that, we are trying to create options to protect the precious resource we have in our skilled trades professionals. The Project Garage is an option for our healthy, injured, disabled, or retired professional tradespeople to earn income with their brains and not just their bodies. It's our love letter to all the tradespeople gutting it out every day.


But another mission we have is to improve the financial education of our tradespeople so they can protect themselves, thrive financially, and build wealth for themselves and their families. In this blog, guest blogger Michael Klasz continues his series speaking directly to tradespeople about things to consider to protect their financial futures.


The character in this story is fictional, but is based on several real life stories reported in social media.


Today, we’re going to chat about protecting yourself from injury. As tradespeople, your

jobs are very demanding on the body. Have you every considered what would happen if

you were hurt and unable to work for an extended period? Some of you may have

already planned for this, while others may have never given it a second thought. Today,

I want to discuss a real-life example and how important it is to have a plan in place if

you get hurt.


A female carpenter wearing a hardhat working with wood
Photo credit to Wix AI photo creator

Steph is a 27-year-old Red Seal carpenter operating as a sole proprietor. Her business

is gaining some real traction and has a steady workload. She’s renting a small

apartment while she slowly saves up to buy a home.


One day on site, she sustained an injury with a saw. Even with proper care at work, an infection had developed that seeped into her connective tissues. To save her hand, surgery was recommended. However, this forced her to take a few months off work. Fast-forward through the recovery process and now Steph is back to work. After just a few weeks being back at work, complications arose from her previous injury. This once again required surgery to be repaired, causing her to miss another few months of work. Over the course of 7 months, Steph has now only worked a total of 3 weeks.


Unfortunately for Steph, she didn’t have any disability insurance and since she wasn’t laid off, she couldn’t claim EI. This forced her to draw from her savings to survive and

pay her bills while she focused on getting back to work. As a result, Steph is

significantly further away from being able to buy her first home but that’s not the only

thing she’s worried about right now. What happens if she’s never able to return to work

full time? Or go back to work period? Without long-term or residual disability insurance,

she’ll be forced to find a new job, likely at a lower pay, or go back to school to learn a

new skillset. Either way, she wouldn’t be able to continue as a carpenter.


How can we avoid situations like this? Well, if Steph had disability insurance, not only

would she have been able to avoid drawing down her savings to live, but she may

also have been able to continue saving towards her first home depending on how much

coverage she had. Before she could start claiming on her disability insurance, she

needs to get through what’s called a waiting period – a period of time where you’re

unable to work due to injury or illness, typically at least 30 days, before you can begin

your claim. This highlights the importance of having a fully funded emergency fund

which we discussed in my last blog post. After Steph has gotten through her waiting

period, she’s able to start her claim and have her income replaced by her insurance

policy. Once Steph returns to work, her claim will stop, and her regular paycheque will

resume. However, when she’s forced to miss more time because of her same hand,

she’s able to skip the waiting period and go directly on claim, avoiding draining any of

her savings at all on the second time around.


A stressed out woman with her hands in her hair
Photo credit to Simian Sood on Unsplash

Now not all disability insurance plans are created equal. As I mentioned, policies can

have different waiting periods and different benefit amounts, but perhaps more

importantly, they can have different benefit periods and different definitions of

disability. Individually owned disability policies can offer benefit periods as short as 2

years or as long as until your age 65. However, the definition of disability tied to the

policy is extremely important. If the definition is “any occupation”, you can only claim on

that policy if you are unable to not only do your own job, but any other job possible. This

can be difficult to qualify for. The definition could also be “regular” or “own” occupation,

meaning if you cannot do the daily tasks of your own job, then you would likely qualify to go

on claim.


Going back to Steph, if she had a policy where the occupation definition was

“regular occupation” and her benefit period was until age 65, she wouldn’t have to worry

about not being able to return to work as she would be able to stay on claim as long as she

wasn’t able to do the regular duties of her own job as a carpenter. Assuming her

monthly benefit is large enough to cover her month-to-month expenses and continue to

save, Steph would still be able to buy a home one day and make it to retirement.


A white sand beach with blue water and a rocky coast

One last thing I want to mention is that disability insurance isn’t just for physical

injuries. You can also make mental health related claims. Whether it be burnout,

overwhelming stress and anxiety, a deep depression, or any number of other mental

illnesses - disability insurance can allow you take time away from work to deal with your

mental health.


When putting together a disability insurance policy specific to your situation, there’s a lot

of things to consider. This is why it’s important to work with a trusted advisor who understands

your situation.


Something I hear a lot is that disability insurance is expensive. While this

is true, I’d like to challenge you and ask this – It’s expensive compared to what? Many

of you will spend thousands of dollars on tools every year. A couple of Dewalt batteries

can run anywhere from $240 to as much as $500 depending on the size.


You’re constantly investing in tools to help you do your job, but what happens if you can’t do your job anymore? Have you invested in your income?


Thanks for reading. If you have any questions or would like to chat more about this,

please don’t hesitate to reach out.


Michael Klasz, RIS

Financial Security Advisor


Investment Representative

Quadrus Investment Services Ltd.

 

2371 Agricola Street

Halifax, NS,

B3K 4B7

Office: (902) 420-8375 Ext. 4

Cell: (902) 478-9040

Fax: (902) 420-8374

Toll Free: (877) 458-4414


© The Project Garage 2024


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