Is there disability insurance for the self-employed?
Is there disability insurance for the self-employed?

People who have employers often receive disability benefits. When you are self-employed, you must take out a disability insurance policy for yourself. You can get a policy no matter what you do to work in the many types of freelance jobs that are available.

Buying a disability insurance policy shouldn’t be optional. It’s cheap – you can find decent policies that will cost you around as much as a cup of coffee a day.

If you are not covered by a disability insurance policy and you get injured or sick, you will not be able to earn money. You need disability insurance to provide financial protection in the event of illness or injury.

A disability insurance policy will not cover all of your income. It will provide a benefit which is part of your income. You make the choice of the percentage of your salary that you need a disability insurance policy to cover.



Can the self-employed benefit from disability insurance?

Typically, an employer provides disability insurance to help cover employee wages in the event of illness or injury. If an employee is injured on the job, they are covered by the Worker’s Comp. If an employee is injured outside of work, that is when disability insurance would be needed.

Yes. Self-employed people can get insurance that provides disability benefits.

The rates are affordable. To obtain a policy, you will need to be able to prove constant income. A disability insurance company will want to look at your income taxes.

How does disability insurance work for the self-employed?

Disability insurance works much the same for employees and the self-employed.

With disability insurance, a percentage of your earnings will be paid to you. If you are injured or become ill, you will have a waiting period – also called a waiting or elimination period – of at least 30 days before receiving disability insurance benefits.

Types of Disability Insurance for the Self-Employed

You can get short-term or long-term disability insurance.

A short-term policy benefit period typically ranges from 90 to 180 days. Long Term Disability coverage includes “built-in” Short Term Disability insurance – short term comes into effect for a specific period while Long Term Disability approval is pending.

In other words, the short term is the first stage of the long term policy. The waiting period for approval of long-term disability benefits can be several months before benefits begin.

An insurance company may pay 80% of your salary during the short-term period and 50-60% during the long-term period. You are paid in monthly benefits.

You can get government coverage through the Social Security Administration or you can get coverage from private disability insurance companies.

Social Security Disability Insurance (SSDI)

You must meet strict guidelines and pay self-employment taxes to be approved for Social Security Disability Benefits (SSDI) in the Social Security system. For example, you must have held an eligible job for a given period. To receive SSDI benefits, you must pay social security contributions, also known as self-employment taxes, and health insurance contributions.

If you have paid Social Security taxes, a disability analyst will review your case using federal guidelines, to see if you receive social security benefits. You must have a disability (injury or illness) that limits your ability to work. The disability must be medically determined and can be physical or mental. You will pass a medical examination.

SSDI benefits are not the same as Social Security benefits. Can I receive social security benefits and SSDI benefits at the same time? No. If so, Social Security will pay you the highest benefit.

Best long-term disability insurance for self-employed private companies

1. Omaha Mutual

Omaha Mutual is undoubtedly the company with the most experience in the field of disability insurance. Applicants for long-term disability insurance will receive an online support agent. The Agent Assistant will help you navigate your expense calculation and determine the length of benefit period you need. There are many choices in these categories. These choices can help you find an affordable solution.

2. Breeze

Breeze is a breath of fresh air. The insurance company was launched in 2019, Breeze offers options adapted to the “gig” economy. Individual plans cost as little as $9 per month. You can get instant quotes when you apply online.

Broken policies go through an underwriting process when you determine the type of business you run, your net profit or income, your age and health, and other considerations. You can choose disability insurance and add critical illness insurance. Business overhead expense insurance policies can help you, as a business owner, with monthly business expenses.

3. Illinois Mutual

Illinois Mutual has a disability policy for a self-employed person. The company also has a business expense policy for small business owners who own their own business.

A star for Mutua of IllinoisI am the ROP jumper. It’s the return of the bounty. When you reach retirement age, you get 100% ROP minus the benefits received under your disability policy. You can also choose to start ROP after you have had your policy for 5 years. After 5 years, you can choose to recoup part of your monthly premiums.

4. North West Mutual

North West Mutual helps you calculate the amount of disability insurance you need to cover part of your salary in replacement of business income, based on annual income or business profits. You will be put in touch with a finance professional.

The financial representative can help you create a larger benefits package. For example, you may be able to bundle long-term disability insurance policies with life insurance and other options.

5. Guardian

A Guardian financial representative will help you determine the amount of coverage you need to get the maximum benefit amount and keep you afloat. Although Guardian is focused on providing supplemental disability policies to employees covered by work-issued policies, the company also has an independent contractor policy.

For those who own their own business with a few employees, Guardian has disability policies for the business owner and employees. Bonuses may be paid as payroll deductions.

6. Insurance

Assurity helps self-employed people obtain disability insurance and obtain additional benefits in the event of catastrophic disability (heart attack, stroke, cancer).

Assurance has very flexible coverage options. For example, you can opt for a policy that will only allow you to collect benefits that will cover your mortgage and utilities. Through Assurity, you can also get partial disability benefits if you return to work part-time.

Best Disability Insurance for the Self-Employed

Finding the best disability insurance depends on your specific needs, your own definition of occupation, and the financial strength of your business. You can even be turned down for business loans if you don’t have this type of insurance.

Our best advice? Don’t wait for a disability to occur. Buy now, using the links provided.

How to apply for disability insurance

You will be assessed in several ways when you apply for disability insurance. Be prepared to provide supporting documentation:

  1. Medical examination – Not always, but may be required depending on the type of work you do and your age.
  2. Income Verification – You will need to provide documents proving your income.
  3. Annual household income replacement – ​​You can choose to receive less benefits if you are part of a two-income household. An agent may ask for the total household income, including the percentage of your contribution, as part of the calculations for the coverage you need.
  4. Your age and location
  5. The type of work you do

How much does self-employed disability insurance cost?

Disability insurance becomes more expensive as you get older. Other factors that influence the cost of premiums are: occupation, your state of health, your age, your income, when you want the policy to start and the duration of the policy.

Here are some round numbers:

  • $23 to $36 per month for $800 coverage.
  • $38 to $63 per month for $1,500 coverage.
  • $58 to $96 per month for $2,270 coverage.

What disability insurance coverage do you need?

You need enough coverage to cover your basic expenses.

You will need to cover your living expenses, such as mortgage/rent, utilities, food, which you normally cover with what you earn.

Keep that in mind. According to data from the Social Security Administration, one in five people will become disabled between the ages of 20 and 67. Of these, 90% of disabilities will arise from arthritis, cancer and heart disease.

What are the requirements for self-employed disability insurance?

You must provide the required information. This will include your age, gender, family medical history, current height and weight, blood and/or urine test results. A medical examination may be required.

If you are a former or current tobacco user, some companies may not issue you a policy. Or, you can expect to pay a much higher premium.

Is self-employed disability insurance tax deductible?

No. Premiums you pay to a disability insurance company are not tax deductible.

But, if you receive benefits, the benefits are tax exempt.

Although disability insurance premiums do not add the benefit of being tax deductible, having a policy is essential.

Image: Depositphotos


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