Self-Employment And Disability Insurance: What You Should Know

Working for an employer may have its downsides, but it also offers one important plus: benefits such as disability insurance. Disability insurance can help you stay on top of your monthly expenses when an injury or other catastrophic health challenge makes work impossible. Self-employed individuals such as freelancers and independent contractors, however, have to obtain their own disability insurance if they want to fill such financial gaps in times of crisis. Here are some key points you'll need to keep in mind if you're trying to solve this problem for yourself.

Focus on Short Term Disability Coverage

The two main categories of disability insurance are short term disability and long term disability. Short term disability insurance covers those critical few months that you need to recuperate from an acute injury, major surgery, or another temporary setback. By contrast, long term disability insurance may help replace part of your income for anywhere from 2 years all the way up to age 65 (or the age when you might have been expected to retire). Salaried workers often receive both types of coverage, while self-employed individuals may need to select one or the other. If you can't juggle two premiums, focus on short term disability coverage and apply for SSDI (Social Security Disability Insurance).

"Own Occupation" vs. "Any Occupation"

If a short term disability insurance quote sounds too good to be true, check to see exactly what its scope of coverage includes. One of the most important considerations is the issue of "own occupation" coverage versus "any occupation" coverage. The former will insure you against the losses you might receive from no longer being able to perform your chosen occupation — even if you could still do something else for a living. The latter replaces a portion of your income only if you can't do any kind of work at all. It may prove more affordable, but it won't pay off unless you're totally incapacitated.

Factors That Determine What You'll Pay

The size of your disability insurance premiums will depend on how much of your income the policy replaces, how long the policy will last, and who offers the policy. Do the math to determine whether a given policy will actually provide sufficient help in paying your bills and other non-discretionary expenses. Short term disability insurance may cover you for as little as 3 months or up to a full year — the shorter the coverage period, the lower the premium. Have detailed discussions with your doctor or therapist about what you can expect in terms of total recuperation time before you decide to skimp on coverage duration. As for the source of your coverage, ask your disability insurance agent if you can get a lower rate through a group insurance program of some sort.

If you're the only source of your income, then you need to make sure you're protected against disability-related dry spells. Contact your local insurance agent today to discuss the various options and get a short term disability coverage quote.

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