Most of us rely on business income to pay our bills. If you weren’t able to work for a period of time due to an illness or injury, disability insurance steps in to help cover your needs, letting you focus on taking care of yourself.
PROTECT YOUR INCOME
FUNDS WHEN YOU NEED THEM
DISABILITY INSURANCE FOR INDEPENDENT WORKERS AND SMALL BUSINESS OWNERS
If you’re an independent worker or running a small business, disability insurance is likely super important to your work-life world. Why? If you become sick or injured and can’t work for some time (and it’s confirmed by a doctor) disability is designed to cover up to about 60% of your paycheck or income. That’s why it’s sometimes nicknamed “paycheck protection.” Basically, disability insurance for small business owners helps make ends meet, until you get back on your feet.
Disability insurance has earned the moniker “disability income insurance” because that’s what it is. When you can’t work because of a serious illness or injury, disability insurance helps cover living expenses, like bills and groceries. Its purpose is to replace a percentage of your income. The difference between it and other health insurance plans is that disability benefits are paid directly to you.
WHY DO INDEPENDENT CONTRACTORS NEED DISABILITY INSURANCE?
It can be hard to imagine getting an illness or injury that could keep you out of work for a period of time. But, did you know that more than a quarter of people are likely to experience an illness or injury that makes it impossible to work for at least one year before they reach retirement age?
Unexpected events happen in life. Cancer and mental health issues are two common reasons for disability insurance, and both of these conditions, as well as others, could pull you away from work for months or even years. As a self-employed individual, your income depends on your ability to work. If you become disabled, you could lose your income.
Disability insurance benefits for independent contractors help keep you — and your small business — afloat so you can focus on getting better.
HOW MUCH DOES DISABILITY INSURANCE COST?
Your insurance premium is generally based on your desired coverage and your annual salary, along with other life factors. Typically, you can expect to pay one to four percent of your income towards your insurance premium. The factors considered when calculating your insurance premium include:
- Your salary
- Your occupation
- Your age
- Your gender
- Your health history
- Your location
- Your benefit amount
- Your benefit period
When choosing your insurance plan, you should also consider planning for future expenses, such as retirement or children’s education expenses.
Disability insurance is essential, because the entire idea of unplanned injuries and illnesses is just that — unplanned and unexpected.
WHAT DOES DISABILITY INSURANCE COVER?
Disability insurance benefits come into play when you have an injury or illness that limits your ability to work. This insurance covers critical illnesses, including heart attack, stroke, cancer, organ failure, cognitive impairment, and serious injuries that lead to an inability to work.
HOW MUCH COVERAGE DO YOU NEED?
Disability insurance coverage needs depend primarily on your expenses, since the benefits you could receive are meant to help replace a portion of your income. To understand what level of coverage you need, you’ll need to calculate how much money is required to pay your bills, loans, and other expenses while you are not working.
Once you have a good understanding of your monthly expenses, it’s time to take a serious look at your emergency savings. The goal here is to determine how long your savings could cover your expenses if you were disabled and unable to work for a period of time. Considering your savings and expenses, you’ll next turn to your salary. Calculate what percentage of your salary could cover your remaining expenses (after using your emergency savings) in case of a disability.