Because a Sole Trader is in business on his/her own, the business is entirely dependent on them. At the same time, so too are their family.
A Sole Trader has to think about what will happen if they die or become critically ill. If the Sole Trader dies, then the business ceases trading immediately whereas if the Sole Trader becomes critically ill, the business may survive but will it still be able to generate the same amount of profit?
Sole traders should always consider taking out a personal policy and including a flexible trust within this policy. Both life and critical illness insurance are highly recommended for sole traders with families.
Perhaps one of the most sensible choices for a sole trader is to take out income protection insurance. This will continue to pay the sole trader during periods of long term illness. Having this type of insurance therefore protects the sole trader’s personal property and financial status even if the business is no longer able to trade.