You’ve done everything you can to make your business successful, but what happens if you get sick or injured and can’t work? Disability insurance can keep your business profitable by making sure that, if you need to take time off from work, you won’t have to worry about money coming in the door. But how do you find the best disability insurance when self-employed? Here are some tips for getting started.
What is disability insurance?
If you’re self-employed, disability insurance is a must. It can help you get back on your feet if a serious illness or injury prevents you from earning an income. So what type of disability insurance should you get? And where do you find it? Here’s what you need to know about finding—and choosing—the best disability insurance when self-employed.
What are the benefits of having disability insurance?
The one thing that your employer can’t do for you is to provide disability insurance. If you’re self-employed, then finding a good policy is even more important since there’s no employer providing it for you. If a major illness or injury prevents you from working, then a disability policy will help make sure that you have an income coming in while you are unable to work. This can mean paying your living expenses and medical bills. Since many self-employed people don’t get paid when they’re off work due to illness or injury, having some cash flow coming in can go a long way toward helping with medical costs and keeping your head above water financially.
Where should I start looking for disability insurance?
Because self-employed people can’t get coverage through an employer, it’s important that you take time to compare plans and choose one that fits your needs. You may already have health insurance through your employer, which can cover some costs associated with disabilities. However, if your disability prevents you from working, there are other expenses such as mortgage payments or student loans that won’t be covered by traditional policies. Some disability insurance policies will cover lost wages for up to a certain point—if you earn $500 a week and decide not to work until you’re back on your feet again, an insurance policy might replace $300 of those earnings per week until you’re healthy enough to return to work full time.
Should I have private or group disability insurance?
It depends on your individual circumstances. If you have a spouse who can provide for you financially, private disability insurance may be more suited to your needs. On the other hand, if you’re single or your spouse makes less than half of your income, group disability insurance is probably better for you because it can come at a lower price and offer better coverage. Ultimately, there isn’t one best option; rather, it depends on where you find yourself in terms of stability and risk tolerance. In either case, though, it’s best to get disability insurance as soon as possible because coverage starts becoming more expensive—and difficult to find—as you age.
How can I qualify for federal disability insurance coverage if I’m self-employed?
Generally, you can only qualify for federal disability insurance coverage if you were working for a business that employed at least one other person besides yourself. In other words, if you are self-employed and disabled, your sole proprietorship or independent contractor status will not make you eligible for Social Security disability insurance benefits. However, there is a way to get some protection in place. You can purchase private disability insurance coverage through an insurance company or brokerage firm specializing in products designed for self-employed individuals. Because these policies are designed specifically with small businesses in mind, they will not treat your own company as an unrelated business entity.
Will my business be affected by my disability?
The most important thing to consider when looking for disability insurance is whether or not your business will be affected by your disability. If it won’t, you probably don’t need a disability policy. (You should still consider disability insurance if you have other employees who are dependent on your income.) A number of different factors go into determining whether or not your business would suffer as a result of your disability. For example, if someone were paying you under a contract instead of an employment agreement, your ability to continue working would likely be less of an issue. However, if a group of people was depending on your services as part of their careers, then you would need additional protection.
Disability policies exclusions and limitations
A disability policy will not cover lost income or a portion of your business earnings if you have an excluded business. An excluded business is defined as any trade, occupation, employment, work, or undertaking in which you engage outside of your primary job. For example, working at another job during your off-hours would be considered an excluded business. The same applies if you take on additional clients outside of what’s written into your current contract. However, self-employment through a second gig may qualify for coverage if it’s declared as a secondary source of income. To put it simply: When in doubt about whether or not your side job is covered under disability insurance policies, check with an agent for confirmation.
Can a family member become disabled?
Unfortunately, injuries and illness are possible at any time. As many as 1 in 3 adults will become disabled before age 65. And if you’re self-employed, you might have a difficult time finding disability insurance. Most insurance companies won’t cover self-employed individuals because of their greater risk of injury or illness. But it doesn’t mean that you can’t find a quality plan—it just means that you need to be more thorough with your search and do extra research before selecting a policy. Read on for some useful tips for finding disability insurance when self-employed.
Is there any way to prepare financially if I end up disabled in the future?
You can’t predict when you will become disabled, it stands to reason that self-employed people should prepare for that possibility and protect themselves financially by purchasing disability insurance. But what makes a good policy? And how do you find one if your business doesn’t provide it? There are several things to look for when shopping around. First, ask yourself: How much am I willing or able to pay? Second, ask yourself: What is my break-even point? Lastly, ask yourself: How long do I want my benefits to last? After answering these questions you will be able to determine which kind of policy is best for you.
Steps you can take now that could prevent your need for long term care insurance
While long-term care insurance may be a critical aspect of your personal finances, it isn’t a necessary investment for everyone. If you are still in good health, you may find that there are many things you can do now that could prevent your need for long-term care insurance in your later years. Get enough sleep. According to WebMD, those who get less than six hours of sleep per night are twice as likely to develop dementia as those who get 7–8 hours of sleep each night. In addition, lack of quality shut-eye has been linked with weight gain and diabetes. So try getting 8 hours of shut-eye every night, and if that’s hard for you (or impossible), take naps when possible—they help restore energy and revitalize memory.
What else should I consider when buying disability insurance?
In addition to looking at disability insurance from companies like State Farm, Allstate and others, it’s also a good idea to look at your current life insurance policies. In many cases, your standard term or whole life policy may be adequate for covering you in case of an illness or accident that leaves you unable to work. Another option is re-evaluating your investment portfolio. A lot of people who own some sort of stock portfolio might find themselves in a position where they can’t afford their monthly payments on stocks they own if they were unable to work for a long period of time because they could sell them off slowly over time instead of all at once by cashing out of their investments prematurely.
All in all, it’s important to find disability insurance that fits your specific needs as a self-employed individual. No matter what, you need to know what coverage is available for you and which types of plans best suit your situation. The key here is planning ahead so you can protect yourself if a medical condition occurs and impacts your ability to work. While there are certainly other insurance options out there, finding disability insurance for self-employed individuals will help give you peace of mind that should something happen, like an accident or serious illness, that prevents you from working as a freelancer or entrepreneur, then you’ll be covered financially while waiting to get back on your feet.