Big Picture Healthcare Articles

Realtors, like other self-employed entrepreneurs, need to pay attention to their own health and benefit choices. They have the luxury of choosing what fits their needs best, but need to pay attention, since no one is going to do it for them.

What would be important considerations for realtors (and other entrepreneurs)? Here is a summary, from my upcoming book on Healthcare and Benefit Choices.

1. Should I hire a financial planner?

That would depend upon what your goals are, your age and your resources.

Financial planners can assist in making sure you ask the right questions, do not miss important areas.

If you have lots of resources, this could be useful. If you do not have lots of resources, you will have to decide if the cost is worth the specialized attention. It would also depend upon how confident you feel about these issues.

2. Do I need an accountant?

That would seem prudent, given your quasi-self-employed contractor status. While accounting software is great for folks with jobs, it tends not to be as precise for people who are self-employed.

3. Do I need life insurance?

If people are depending upon your income (kids, spouse, elderly parents) you need enough insurance to replace your earning power. A conservative estimate would be that you need at least 8 times your income in insurance. This will keep your heirs in their own world, financially. 10-15 times would be better, since 4-5% interest on assets is an average return today, and S & P index are only returning 8-10% at best.

If no one is depending upon your income, you need only enough to cover your debts when you die.

4. What other insurance do I need?

For a realtor, one of the most important types of insurance is high limit auto liability insurance, since you tend to carry customers in your vehicle every day. Confer with your insurance agent on when commercial vs. personal coverage is required. Some insurers have innovative riders designed for "home-based" business owners. Usually your carrier will determine at what point this shift is recommended. I would be sure that my liability would be at least as high as the average price houses I sell. I would be inclined to double that in fact. I would carry extra coverage for medical payments to others as well.

Disability Income coverage is also important for anyone self-employed. When you are sick, your income slows, then stops. There is a time delay for realtors, so they can build in a wait on the policy (which will decrease the costs). There are no programs to support self-employed folks who become disabled, except your own disability income, and social security, which would depend upon the level of contribution you paid in, after your expenses. Disability income at 50% of your healthy income probably is good.

If you are a broker and/or franchise owner, you might want additional disability policies to pay office costs when you are sick (business interruption). There is also a key man coverage, or buy-sell coverage, which would help your organization replace your contribution in various ways, economically if you become disabled permanently or die. You will want these coverages on your partners, so you do not have their spouses running your business if your partner becomes disabled, or dies as well.

Of course there are standard business insurance, errors and omissions and umbrella liability policies. These help if you are sued for professional activities. Having these coverages, protects your assets from being attacked.

All of these things need attention because you are a realtor.

5. Other coverage is recommended to all people who have the means to afford them.

You want health insurance that matches your wellness and health philosophy and fits your budget.

You want appropriate estate planning techniques depending upon your asset mix, your wishes for your heirs, your tax liability potential. These could include a will, a living trust, trusts for children. You might decide to incorporate your business to protect your personal assets and separate them from your business assets. You might decide long term care is appropriate. It is for most people, but it is costly. You might want to donate your organs to science, have living wills, and medical directives.

6. Most financial planners suggest that a minimum of a three-month cash reserve is great, that certain investors determine the amounts of risk they are willing to assume and invest according to their risk tolerance.

However, each person's risk profile is different and what people perceive as risky is different as well. With home equity loans, there is less need for cash reserves. The key is access to funds, not where they sit. For realtors, who tend to like investing in real estate, this might mean having a line of credit on at least one property available.

Diversifying one's risk and investing in what one knows are two classic investment principles. Many realtors invest in real estate, because it is what they know. If they do, they may choose to invest in alternative investments which tend to do well, when real estate is soft. Again that will depend upon your philosophy and resources.