No one ever plans on becoming disabled, but the unfortunate truth is that accidents happen and illnesses occur. In fact, according to the Social Security Administration, around 25% of today’s 20-year-olds will become disabled before they turn 67.
Being self-employed has a lot of advantages. You're your own boss, you make your own hours, and you get to be in control of your own career. However, there are also some drawbacks. One of the biggest is the lack of benefits. When you are self-employed, you don't have the safety net of an employer-provided disability insurance policy. This means that if you become ill or injured and can't work, you are completely responsible for your own income. For most people, this would be a difficult situation to manage. But for those who are self-employed, it can be especially challenging. When you're self-employed, your income is often irregular. This makes it hard to save enough money to cover all your expenses if you're suddenly unable to work. Additionally, many self-employed individuals don't have any paid time off, so if they can't work, they don't get paid at all. This can make it difficult to keep up with bills and other financial obligations.
Disability insurance is a type of insurance that provides financial protection in the event that you are unable to work due to an injury or illness. The policy will replace a portion of your lost income, typically up to 60%, and can help you cover essential expenses such as mortgage payments, medical bills, and living expenses. In order to qualify for disability insurance, you must be unable to work in your chosen profession due to your injury or illness. The length of the policy will depend on the severity of your condition, but most policies will provide benefits for a period of two years or until you reach retirement age.
What to Consider
When you're self-employed, it's important to make sure that you not only have insurance coverage in place but also that you have the right insurance. Here are a few things to keep in mind when you're choosing a policy:
- Make sure you have enough coverage. This will depend on your income and your regular expenses. Your policy should provide enough benefits to cover your obligations.
- Consider the waiting period. This is the amount of time that you'll have to wait before benefits begin. A shorter waiting period will mean higher premiums, so it's important to find a balance that works for you.
- Choose a benefit period that makes sense for you. This is the length of time that benefits will be paid out. Again, a longer benefit period will usually mean higher premiums, but it may be worth it for the peace of mind.
- Consider the length of time that you'll need coverage. If you're young and healthy, you may not need coverage for as long as someone who is older or has a pre-existing condition. There are also policies that will cover you for a certain number of years or until you reach retirement age.
- Review different types of policies. There are policies that will pay a percentage of your income, and there are also policies that will pay a set amount each month. You'll also want to consider the type of policy that's right for you.
If you're self-employed, disability insurance can be a vital part of protecting your financial future, so make sure you do your research and compare policies before you decide on the right one for you. There are a lot of factors to keep in mind, and you want to make sure that you're getting the best possible coverage for your needs. If you have questions reach out to me, I would love to start that conversation.