Career Insurance: Insuring Your Most Valuable Asset

The following is a repost of a piece I originally wrote for Get Rich Slowly.

For the vast majority of people, their career is their most valuable financial asset. Nothing else they own is likely worth as much (several million dollars over a lifetime). And even if they do have something more valuable (like an investment portfolio), it was probably earned as a result of their career.

As with anything valuable, you need to take steps to protect your career. That's why financial websites recommend life, health, and disability insurance -- to protect/replace the value of your career in case you die, get sick, or are physically unable to work. Having some form of these insurances is generally wise for almost every worker. But there's another form of insurance that's equally essential.

This insurance is free, but it will take some work and planning.  Its benefits go far beyond the time it takes to implement the steps involved.  And in addition to increased income, this insurance may even give you more job satisfaction, less stress, and a longer life.  Interested? 

I'll call it "Career Insurance" (creative name, huh?).  This Career Insurance is not a product you can buy, but a series of actions you can proactively take to minimize the chance that your career will take a major hit.
 
These actions can help you avoid the following situations:

• Being fired or laid off.  The negative impact of losing your job is not only loss of income but your career progress is halted.  You lose valuable time which limits the compounding growth of your earnings.  Plus, when you consider that many people have to take a step back career-wise when they finally do find a new position, you realize just how bad a firing or layoff can be.
• Long layoff time. Even taking steps to avoid firing and layoffs, they can still happen.  If you are let go, you must focus on minimizing the time that your career is in limbo. The longer you are laid off, the longer your most valuable asset stagnates and the more likely you are to take a job that's far below your previous level.
• Financial strain. This step doesn't protect your career per se, but it minimizes the pain associated with losing a job.  You'll have less stress, more energy and extra time to focus on finding new work.
• Physically unable to work. No work = no pay. There are things you can do to prevent illness and injury as well as things you shouldn't do to maintain good health.

You can protect yourself from these hazards and develop your own Career Insurance by taking the following steps:
 
Protection from Firing or Layoff

1. Make yourself more valuable/indispensible to your employer. Let's face it, even in the worst environment imaginable, the ones who keep the ship afloat are the last ones fired from the crew. So deliver more than what's expected for your position (and more than most or all others in your organization/department). In particular, if you can contribute to the organization's bottom line on a regular basis by saving it money and/or growing revenue, you're usually untouchable. Oh, and don't forget to be likeable as well. Yes, producing jerks are still kept on staff, but they are fired before productive nice guys. ;-)

2. Get a mentor. Having someone above you in the organization who can guide and direct you has many benefits. A mentor can help propel your career by making you more effective, help you accomplish more, and pave the way for promotions and raises. All of these are great reasons for having a mentor. But there are other benefits -- Career Insurance benefits. A mentor can watch your back when firings and layoffs occur. He may put in a good report for you in key meetings. At the least, he might be able to give you advanced warnings as to when layoffs could be coming, so you can get a jump on finding a new job.

3. Network inside the company. In addition to having a mentor, you should develop good contacts throughout the company at various levels. Again, these can help protect you in troubled times. Once when my company was facing layoffs, I had another executive speak up on behalf of one of my employees because she had also worked with his department on a key project. In the end, his defense helped sway committee decisions and she was able to keep her job. In short, you never know how or when someone can help you, but the more people you have looking our for your best interests, the better off you are.

Protection to Minimize Layoff Time

1. Network to develop contacts outside your company. Networking is a key way to grow your career. One major benefit: it connects you with people who can assist you in finding new work. Statistics show that a majority of jobs are placed by networking, so the bigger your network, the better chance that you can use it to find a suitable job quickly. So work to broaden your contacts through lunch dates, seminars, trade shows, industry events, volunteer activities, social media, common interests, and more.  And of course, a network doesn't only work when you are out of work. It's helpful when you're employed and want to make a change too.

2. Refresh your resume. You should keep track of your work accomplishments on a regular basis -- it's part of a systematic way to get raises and promotions -- so you'll always have a handy list of what you've done and how you've performed. (BTW, having a system will make sure you don't forget anything major.) These will allow you to develop an updated resume immediately if you're let go. In addition, your list will allow you to be sure your resume is full of high-end accomplishments. Update your resume as quickly as possible and get it out to your network pronto.

3. Get an employment contract. While this won't get you a job faster, it will basically extend your current income for a period of time. The ultimate in protection, an employment contract is usually held by top-level executives and other key personnel. But if you can obtain this status, you know that even if you're let go, your company will have to pay your salary for the stipulated amount of time -- usually six months or a year -- even if they fire you. Usually this is more than enough time to find new employment without disrupting your career.

Protection to Minimize Financial Strain

1. Develop outside streams of income. If you get fired, one way to cushion the blow is to have income from other sources. It might not provide the level of earnings you're used to, but SOME money coming in is certainly better than NO money coming in. Suggestions to bring in more money: develop a hobby as a business, start your own business on weekends or evenings (I like to referee soccer matches), and work on growing your investments (if you have savings/investments they can sometimes be reallocated to produce income.) Consider all the ways that you might be able to earn more money, select one or two that work for you, and start now in getting them developed. Even if you never need them in case of a job loss, the extra income will still come in handy.

2. Increase the amount in your emergency fund. A key reason for having an emergency fund is to provide for your needs in case you lose your job. And the less stable your job situtaion (or the more likely a layoff could be coming), the higher amount you need in an emergency fund. Almost everyone should have at least six months of living expenses saved up in case of a loss in income. If you're in an uncertain industry, company, or position, work now to bump that up to give yourself protection comensurate with your risk.

Protection from Not Being Able to Work

1. Disability Insurance. Yes, this is a traditional insurance product, so maybe it shouldn't be part of this post. But it's also probably the most ignored insurance product on the market -- and yet it protects your largest asset. You MUST get some sort of disability insurance coverage. Sometimes this will be provided through your employer, but many times the level of coverage is not adequate. Make sure any disability policy you have will replace at least 60% of your income and will kick in before your emergency fund runs dry.

2. Keep/get in good shape. If your body isn't functioning fully, you can't work to your full potential (which isn't good for your job security.) So follow mom's suggestions: eat properly, get plenty of rest, exercise, drink water, and keep stress as low as possible.

3. Take precautions against sickness. If you're sick, you can't work. At a minimum it will cost you valuable vacation time. And feeling poorly always negatively impacts your performance. So follow mom's other set of instructions: wash your hands (especially during cold and flu season), take action at the first signs of sickness (drink fluids and get plenty of rest), seek medical help when needed, and "don't smoke, drink, or chew or hang with those that do". By taking care of your body, you'll not only be a better employee, you could also get the added benefit of prolonging your life.

Of course, no plan will work 100% of the time. Despite all of these precautions, the perfect storm could occur and sidetrack your career a bit. But Career Insurance will certainly help you weather the storm, minimize any damage, and ultimately move your career along. So get started today developing your own Career Insurance and ensure that your most valuable financial asset is protected the way it should be.

Comments

[Everyday Tips]

I think the best thing you can do is take care of yourself. Eat good, exercise, etc, even if it costs more. You are your most valuable asset, so you have to take care of it!

[Squirrelers]

All very good tips. I think too many folks think of the day-to-day routine, and don't think big picture when it comes to career management. It does involve staying dialed in to trends and being able to "read the tea leaves", so to speak, when understanding what's going on with your employer/industry/line of work. Keep your eyes open.

Also, health is underrated in career management, and can play a big role in one's ability to continue working at advanced ages. Additionally, being healthy can help one's energy level and capacity to work at a high level.

[Invest It Wisely]

Insurance against unforeseen events is important, and I've argued in the past that keeping a healthy gap between income and expenses is also very important. If you are a two-income household and yet your expenses can be paid on one income alone, your financial house will be much more resilient to shocks and stress. That leads to much better sleep at night. :)

[Don Current]

Great advice. I can definitely speak to this issue as well. I worked for the same company for over 17 years. I started there as part of a co-op program in college and I continued there after receiving my B.S. in Engineering. I did all those things you mentioned under Protection From Firing and Layoff. I moved up through the ranks until I was the Operations Manager for the largest department in our factory. I had key contacts in corporate who valued my expertise greatly and shared that with others as often as they could. All that didn't matter when the company went Chapter 7 bankrupt. Make sure you don't just pick and choose which section of the advice you take. It is ALL important. We also had a healthy dose of Protection to Minimize Financial Strain, so in the long run, it has been the best thing that has happened to me. I'm not running my own business and determining my own destiny. Make sure you've got "full coverage" not just "limited liability" when it comes to this insurance package.