Life doesn’t always go as planned. As a self-employed individual, you probably know this better than anyone. You had to work through lots of obstacles — expected and unexpected — to get where you are now. And now that you have a successful business, you need to protect it. Disability insurance for the self-employed is your best bet.
In this article, we’ll discuss how self-employed individuals can benefit from disability insurance, as well as how to choose the best long-term disability insurance for your self-employed business.
What is disability insurance?
Disability insurance helps cover your living expenses if a covered serious injury or illness makes working impossible. You pay a monthly premium based on your coverage needs and, if you are ever unable to work for an extended period of time because of a covered injury or illness, you will receive disability benefits.
What is the definition of a disability?
In order to qualify for disability insurance benefits as a self-employed individual, you need to experience a covered severe illness or injury that prevents you from doing your job or any job, depending on the policy.
In order to qualify as a disability, the sickness or injury experienced would have to lead to an inability to work at your regular occupation or any job.
The primary difference between short-term and long-term disability is the benefit period, or the amount of time you may receive benefits. Short-term disability has a shorter benefit period and is typically used for injuries or covered illnesses the individual is expected to recover from.
Long-term disability has a much longer benefit period. Individuals who need assistance for years — or even for the rest of their lives — can benefit from a long-term disability policy. Long-term disability insurance for the self-employed can be a lifesaver if a covered illness or injury keeps you from working on your business and receiving a paycheck.
How does being self-employed affect disability insurance?
As a self-employed individual, you often don’t have the security net that employees of large corporations do. You don’t have paid time off or sick days, so if you don’t show up to work for multiple days or weeks, you don’t get a paycheck. Plus, if you’re at home recovering for a long time, you could lose your business that you’ve worked so hard to build.
Disability insurance for the self-employed is an important protection.
The cost of disability insurance varies based on a few different factors, such as:
- Income: Since disability insurance is meant to help cover your living expenses, your current income and expenses matter when calculating your premium. The higher your income and living expenses, the higher premiums you should pay for disability insurance so that you can receive an adequate amount of disability benefits if you were to need them.
- Age: Your age is a risk factor that may increase your disability insurance premiums. The older you are, the more likely you are to experience a debilitating illness.
- Health status: If you are currently experiencing health difficulties, or if you are at risk of experiencing health problems, your premium may be higher, or you may not be insurable for a period of time.
Who needs disability insurance?
Anyone who relies on personal work income and has a chance of experiencing an injury or illness in their lifetime should have disability insurance. And, since none of us can really predict when an accident is going to happen, anyone who works usually needs disability insurance. Disability insurance is especially essential for independent workers and those who run their own business. It works as a safeguard for you and your livelihood.
What isn’t covered by disability insurance?
Like all insurance plans, disability insurance plans have limitations and exclusions with their coverage. The disability insurance for independent contractors often does not cover loss of income due to the following situations:
- Pregnancy, childbirth, or an elective abortion
- Losing an occupational or professional license or certification
- Being exposed to war
- Engaging in an illegal occupation
- Participating in or attempting a felony
- Intentionally self-inflicting an illness or injury
- Committing suicide, or attempting suicide
- Being incarcerated
- Being under the influence of alcohol or drugs
- Actively serving in the armed forces
Having disability insurance gives you some protection and peace of mind. If you’re interested in a policy, give us a call and we can talk you through the best options for you and your small business.