Disability Insurance for Self-Employed and How to Get It

If you are self-employed, you know how rewarding it can be to work for yourself. You have the freedom to set your own schedule, pursue your passion, and enjoy the fruits of your labor.

But you also face some unique challenges, such as managing your taxes, finding clients, and covering your expenses.

One of the biggest risks that self-employed workers face is losing their income due to a disability.

A visual presentation picturing self employed disability insurance | Photo courtesy: Instant Disability Insurance
Self-employed workers should also compare different disability insurance policies from different providers, and choose the best policy for them | Photo courtesy: Instant Disability Insurance

According to the Social Security Administration, one in four 20-year-olds will become disabled before the age of 67. And if you don’t have an employer-sponsored disability insurance plan, you may have to rely on your savings, family, or government benefits to survive.

That’s why disability insurance is essential for self-employed workers.

Disability insurance can provide you with a monthly income if you are unable to work because of an illness or injury. It can help you pay your bills, maintain your lifestyle, and keep your business running until you recover.

But how do you find the best disability insurance for self-employed workers? What factors should you consider when choosing a policy? And how much coverage do you need?

In this article, we will answer these questions and more. We will also share some of the best disability insurance providers for self-employed workers, based on our research and analysis.

What is disability insurance?

Disability insurance is a type of insurance that pays you a percentage of your income if you become disabled and can’t work.

There are two main types of disability insurance:

  1. Short-term
  2. Long-term

Both types of disability insurance have different features and options that you can customize to suit your needs and budget. Some of the most important factors to consider are:

  • The definition of disability

This determines how the insurance company defines your inability to work. The most common definitions are own-occupation, any-occupation, and modified any-occupation.

Own occupation means that you are considered disabled if you can’t perform the duties of your own occupation, even if you can do another job.

Any occupation means that you are considered disabled only if you can’t perform any job that matches your education, training, and experience.

Modified any-occupation means that you are considered disabled only if you can’t perform any job that pays at least a certain percentage of your pre-disability income.

Own-occupation is the most favorable definition for self-employed workers, as it allows you to claim benefits even if you can do some work in a different field.

  • The benefit amount

This is the percentage of your income that the insurance company will pay you if you become disabled.

The benefit amount usually ranges from 50% to 80% of your pre-disability income, depending on the policy and your income level.

The higher the benefit amount, the higher the premium. You should choose a benefit amount that covers your essential expenses and allows you to maintain your standard of living.

  • The benefit period

This is the maximum length of time that the insurance company will pay you benefits if you become disabled.

The benefit period usually ranges from two years to lifetime, depending on the policy and your age.

The longer the benefit period, the higher the premium. You should choose a benefit period that matches your expected retirement age or your recovery time.

  • The waiting period

This is the length of time that you have to wait before the insurance company starts paying you benefits after you become disabled.

The waiting period usually ranges from 30 days to 365 days, depending on the policy and your preference.

The shorter the waiting period, the higher the premium. You should choose a waiting period that matches your emergency fund or your sick leave.

RELATED SEARCH: What does long-term mean in disability?

Why do self-employed workers need disability insurance?

Self-employed workers need disability insurance because they don’t have the same safety net as employees.

Employees often have access to employer-sponsored disability insurance plans, which can provide them with some income protection if they become disabled.

Employees may also qualify for workers’ compensation, which can cover them for work-related injuries or illnesses. They may have other benefits, such as health insurance, paid leave, and retirement plans, that can help them cope with a disability.

Self-employed workers, on the other hand, have to pay for their own disability insurance, health insurance, and retirement plans.

They also don’t qualify for workers’ compensation, unless they buy their own policy. And they don’t have any paid leave, unless they save for it. This means that self-employed workers are more vulnerable to the financial impact of a disability, which can be devastating.

Disability insurance is a must-have for self-employed workers. Disability insurance can provide you with a steady income if you become disabled and can’t work.

It can help you cover your personal and business expenses, such as your mortgage, utilities, groceries, car payments, insurance premiums, taxes, payroll, rent, and equipment.

It can also help you preserve your savings, investments, and retirement funds, which you may need for your future goals. And it can give you peace of mind, knowing that you and your family are protected from financial hardship.

DID YOU KNOW?

According to a survey by the Council for Disability Awareness, 49% of self-employed workers said that they would not be able to pay their bills for more than three months if they became disabled. And 38% of self-employed workers said that they would rely on personal savings or investments to replace their income if they became disabled.

But the average duration of a long-term disability claim is 34.6 months, which means that many self-employed workers would run out of money before they recover.

What are the best disability insurance providers for self-employed workers?

There are many disability insurance providers in the market, but not all of them are suitable for self-employed workers.

Some providers may not offer own-occupation disability insurance, which is the most favorable definition of disability for self-employed workers.

Some providers may not cover certain occupations, such as artists, writers, or consultants, that are considered high-risk or hard-to-insure. And some providers may charge higher premiums or impose stricter underwriting criteria for self-employed workers.

To help you find the best disability insurance providers for self-employed workers, we have compiled a list of some of the top-rated and most popular providers, based on our research and analysis.

These providers offer own-occupation disability insurance, cover a wide range of occupations, and have competitive pricing and flexible options.

Here are some of the best disability insurance providers for self-employed workers:

1. Guardian

Guardian is one of the largest and oldest disability insurance providers in the US, with over 160 years of experience.

<yoastmark class=

It offers own-occupation disability insurance with a true own-occupation definition, which means that you can receive benefits even if you work in another occupation or earn income from another source.

Guardian also offers a high benefit amount, up to $20,000 per month, and a long benefit period, up to age 70.

It has a strong financial rating, A++ from A.M. Best, and a high customer satisfaction rating, 4.6 out of 5 from Trustpilot.

Guardian’s disability insurance policies are customizable, with various riders and options, such as residual disability, cost of living adjustment, future increase option, and non-cancelable and guaranteed renewable.

Guardian’s disability insurance policies are available through independent agents or brokers.

2. Principal

Principal is another leading disability insurance provider in the US, with over 140 years of experience.

<yoastmark class=

It offers own-occupation disability insurance with a modified own-occupation definition, which means that you can receive benefits if you can’t perform the duties of your own occupation and you are not working in another occupation.

Principal also offers a high benefit amount, up to $20,000 per month, and a long benefit period, up to age 70.

It has a strong financial rating, A+ from A.M. Best, and a high customer satisfaction rating, 4.5 out of 5 from Trustpilot.

Principal’s disability insurance policies are customizable, with various riders and options, such as residual disability, cost of living adjustment, future increase option, and non-cancelable and guaranteed renewable.

Principal’s disability insurance policies are available through independent agents or brokers.

3. Breeze

Breeze is a new and innovative disability insurance provider that offers online and affordable disability insurance for self-employed workers.

<yoastmark class=

It offers own-occupation disability insurance with a modified own-occupation definition, which means that you can receive benefits if you can’t perform the duties of your own occupation and you are not working in another occupation.

Breeze also offers a high benefit amount, up to $20,000 per month, and a long benefit period, up to age 70.

It has strong financial backing, from Assurity Life Insurance Company, which has a financial rating of A- from A.M. Best. It has a high customer satisfaction rating, 4.9 out of 5 from Trustpilot.

Breeze’s disability insurance policies are simple and straightforward, with no medical exam required and instant approval.

Breeze’s disability insurance policies are available online, through their website or app.

How to find the best disability insurance for self-employed workers?

Finding the best disability insurance for self-employed workers can be challenging, as there are many factors to consider and many options to choose from. But there are some steps that you can take to make the process easier and more effective. Here are some tips on how to find the best disability insurance for self-employed workers:

  • Assess your needs: Before you start shopping for disability insurance, you should assess your needs and determine how much coverage you need and how much you can afford. You should calculate your monthly income and expenses, both personal and business, and figure out how much income you would need to replace if you become disabled. You should also consider your existing sources of income, such as savings, investments, spouse’s income, or government benefits, and how long they would last.
  • Compare different policies: Once you have a clear idea of your needs, you should compare different disability insurance policies from different providers. You should look for policies that match your needs and preferences, and that offer the best value for your money. You should also check the reputation and ratings of the providers, and read the reviews and testimonials of other customers. You can use online tools, such as [Policygenius], [Breeze], or [Disability Insurance Quotes], to compare different policies and get quotes from multiple providers in minutes.
  • Choose the best policy for you: After comparing different policies, you should choose the best policy for you. You should consider the cost, coverage, features, and options of each policy, and weigh the pros and cons. You should also read the fine print and understand the terms and conditions of the policy, such as the exclusions, limitations, riders, and guarantees.

Disability insurance is a smart investment for self-employed workers, as it can safeguard their income and their future.

Leave a Comment