Do you own any tangible property, such as computers, musical instruments, or a home? These are assets that many of us have and need to protect. Another important asset to safeguard is your health. Talent, reputation, relationships, and intellectual property are often overlooked as real assets, but these intangible assets can be at least as valuable as any traditional tangible property — and they need to be protected as well.
Talent is something that you can preserve by constantly challenging yourself. Haven't new experiences — from getting a new synth patch to starting (or ending) a relationship — always sparked your muse? Doesn't it make sense that adding more experiences to your life should help you become a better music professional? Improving your skills should be a top priority because the more you know, the more you have to draw on for inspiration.
We all work hard to build and sustain our reputations. Don't let mistakes tarnish yours, because once your reputation ruined, it can take a long time to rebuild. Safeguard and grow your reputation by promoting your image and earning credentials, such as awards and media coverage.
Your most valuable asset is often who you know. Take the time to nurture your network of clients, vendors, peers, media, mentors, and others who form your career bedrock. Healthy relationships require give and take to work, so never forget to support those who support you. These priceless relationships are crucial to reaching your goals.
All creative works, including music and lyrics, are considered intellectual property. Because they are a revenue source, protect them by invoking the applicable rights and laws. While you can't prevent someone from stealing your original idea, the specific way in which you convey the idea is something that you can protect. For songs, copyright laws offer rights to reproduce copies; make derivative works; distribute works for sale, lease, or rental; and perform the copyrighted work publicly. Contact the U.S. Copyright Office (www.copyright.gov) for more information. For names, slogans, and logos, trademark laws help you protect what you use to promote your music business. Patent laws protect your original inventions and formulas. Patent and trademark applications are handled by the United States Patent and Trademark Office (www.uspto.gov). Take advantage of these laws to protect your creations.
AN APPLE A DAY
Preserving your health not only makes you feel good, but it can benefit you financially. Staying healthy protects your capacity to make money. If you're sick, you are less able to work toward your goals. Staying healthy also protects savings that you may have accumulated. With health-care costs on the rise, a single major illness can put you in the red fast, and you could end up paying the tab for many years to come. Having health insurance can minimize your risk when unforeseen circumstances happen in your life.
Buying insurance is, in a sense, a game. You justify paying the bill knowing that help will be there when you need it. In the back of your mind, you hope that you'll never have to use it. But peace of mind comes with a price that some people are willing to pay. Insurance carriers know that, statistically, most people won't file claims or claims will be minimal.
Many countries, such as Canada, offer universal health care for its citizenry. In the United States, however, we are on our own. Employers frequently provide coverage, but many musicians are either self-employed or work part time, which means health benefits for them are more often the exception than the rule. Buying a policy is expensive, so look for alternatives first. Can you get insurance through a working spouse? Can you join an organization, association, or union that has a group policy, such as the musician's union (American Federation of Musicians, www.afm.org)? For students, even those enrolled only part time, policies through school or reduced rates through a parent's policy may be viable options.
If none of these alternatives apply, you can secure a suitable policy on your own. Thankfully, the Web makes doing research easy. Two possible starting points are www.musicproinsurance.com and www.ehealthinsurance.com. There are others; seek them out by asking friends and colleagues and by searching the Web.
HEALTHY, WEALTHY, AND WISE
Major medical policies cover most health-related issues and let you choose the practitioners and facilities that you want to use. They are therefore the most expensive policies you can buy. In contrast, HMO and PPO policies — which are usually cheaper — let you select from doctor and hospital networks, and you must use only those approved by your plan for the coverage to take effect. Any out-of-network expenses either cost you more or are not covered at all. HMOs and PPOs give discounts on routine and preventative care, and savings on certain medical conditions not covered under the medical policy, such as dental and eye care. Many HMO and PPO plans use local health-care providers, so if you're on the road a lot, that choice may not be right for you.
Basic or catastrophic policies cover only emergencies and surgery; you have to pay for routine care yourself. For the young and healthy, that kind of policy can be a good choice. The costs stemming from routine care or persistent illnesses, however, can add up quickly.
The amount you pay for a policy, called the premium, depends on its type, medical coverage, deductible, and copayment. Coverage for certain medical conditions, such as pregnancy, cost more. In most cases, you are required to pay initial medical expenses out of your own pocket before the insurance coverage kicks in. This threshold is called a deductible. Costs accumulate until you meet the deductible. The higher the deductible, the lower your premiums, but you risk incurring more out-of-pocket expenses. Each person listed on a policy must meet his or her own deductible. If you have a family policy, the deductible is typically three times the amount of a single-policy deductible.
Many policyholders don't realize that once they exceed the deductible, they can still be required to share some of the medical expenses. For example, the insurance company may pay 80 percent of the bill while you pay the other 20 percent. HMOs and PPOs also require copayments in addition to the deductible for certain services. For example, I must pay a $30 copay for each doctor office visit both before and after I meet my deductible.
Thankfully, there is an annual out-of-pocket limit for the maximum amount that you must pay. Once you pay that amount, the insurance pays 100 percent of any additional covered medical costs. When the year is up, you start paying all over again. Be aware that policies have a lifetime limit on the amount that the insurance company will ultimately pay.
Each policy explains in detail what is covered and what is not. Although it's not the most exciting reading, it's important that you understand the specifics of the policy that you are buying and any limitations. You can contact the insurance company and ask a representative to explain it to you. You don't want to merely think something is covered; you want to know it is.
When choosing an insurance policy, check for prescription drug coverage. Medicine can be expensive, and a single infection can set you back several hundred dollars. If you can afford the additional premium costs, then adding drug coverage to your policy can save you money down the road. It's important to note, however, that pharmaceuticals often have a separate deductible.
Health-care expenses are tax deductible once you exceed a certain dollar amount, so it is important to keep good records. The 2003 tax year was the first time that self-employed business owners could deduct 100 percent of their health-insurance premiums from their taxes. Monitor your medical bills diligently. Always check the bills you get from doctors, hospitals, and labs, and carefully compare them with insurance company statements. If you find errors, take the time to get them corrected — doing so frequently works in your favor.
ME, MY, MINE
Obtaining property insurance is the primary way to guard the items that you own. Perhaps you already have a homeowners or rental-insurance policy covering your physical property. Your music gear or anything you use for your business may or may not be covered under that policy. Talk to your insurance agent and describe your situation in detail. You can buy a separate policy to insure your business property or, for a slightly higher premium, you can get a rider for your personal policy.
The insurance business has changed dramatically since the September 11 attacks on the World Trade Center, so check your policy carefully to see which perils are covered and which ones are excluded. In general, fire, water, theft, and natural disasters — except for floods and earthquakes — are covered. Floods and earthquakes require purchasing additional, and often expensive, policies.
Make sure that you know when and where you are protected. If your policy covers only your home, and something gets stolen from your car after a gig, you need to know if your insurance will pay for it.
How much you pay for a premium depends on your coverage amount. Like health-insurance policies, property-insurance policies have a deductible. The insurance carrier pays for the amount that exceeds the deductible. Unlike medical policies, however, these deductibles do not accumulate. The deductible applies to each individual claim. If you file many loss claims, your total out-of-pocket costs could be considerably more than you expected.
Spend time determining the real value of what you are insuring. Read the policy carefully so that you understand its limits. That is usually a total dollar amount; make sure it's enough to cover you should you lose everything. Also, check to see if your policy pays replacement cost or actual cash value. The replacement value pays the full amount needed to replace the item. The cash value pays the market value of the item, which can sometimes be only 10 to 20 percent of the original price. You also need to know how to file a claim — for example, if you are filing for stolen items, you'll need to send in a police report with your claim.
When it comes to keeping records, follow the guidelines established by your insurance carrier. Most require documented inventory of your property. The greater the detail, the easier the claims process will be. I suggest recording the model name and number, serial number, and original purchase price and date for all your gear. If you have vintage equipment, have it appraised regularly. File this paperwork with your agent and keep another copy in a remote location, such as a bank safety deposit box. Photos and videotapes of your property can serve as valuable documentation of what you have.
Protecting health and property need to be top priorities for musicians (see the sidebar “Never Enough” for other types of insurance and protection). While this article gives a basic primer to the subject, it may also pose more questions than it answers. Have this article handy when you call or visit your insurance provider so that you can discuss the options and make informed decisions.
Jeffrey P. Fisherhas written six music and sound books, including Instant Sound Forge (CMP Books, 2004). Want to know what he's up to? Visitwww.jeffreypfisher.com.
In addition to health and property insurance, these other forms of insurance and asset protection could serve you and your business well.
This is another special form of property insurance. It is the law in many states, and you should insure any vehicle that you use for your music activities. If your vehicle is for business and personal use, check with your insurance carrier to be sure your coverage is sufficient.
Should you be unable to work either for a short- or long period of time, disability insurance pays a portion of your lost income. These policies can be rather expensive and pay only 60 to 70 percent of your income prior to the disability. Unfortunately, it can take several months for the insurance to start paying even after approving your claim. If you become permanently disabled, Social Security would be available to you.
Did you know that in a lawsuit your assets can be liquidated to settle the claim? We live in a litigious society, and an umbrella liability insurance policy can protect you. Umbrella policies are appropriate for people with a lot to lose.
Life insurance pays beneficiaries when you die. Insurance companies determine the premium based on the death benefit amount, your age, and lifestyle. Do other people, such as children, depend on your income? If so, it's a good idea to have such a policy in place.
Partnership contracts and agreements
If you work with a partner, it's beneficial to have a suitable agreement in place to protect the assets that you control together. If the partnership turns sour, having an agreement can save you from experiencing problems down the line.