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Considering sales and many other commission-based jobs typically require more people skills than motor-skills or physical exertion, commission-based professionals have a tendency to not consider disability insurance. Obviously, if you’re an effective salesperson, all you really want is a few moments of conversation with an individual to close a deal, right? But what if that can’t happen? Here, we’ll discuss disability insurance when you work on commission.
This may be true, but what if the discomfort from your disability is so serious that you cannot even think straight, let alone convince clients with your silver tongue? What if your potential disability stops you from even getting out of bed to meet with a new customer? The results could possibly be career ending, and with no safety net in place, essentially devastating to your life, your savings, and your family’s well-being.
However, while your need for disability insurance may be apparent, commission-based professionals often run into issues when it comes to establishing the amount of disability coverage they should purchase. Since the compensation for commission-based workers has a tendency to vary, it can be a lot more challenging for them to anticipate a potential loss of income than for individuals who work on a salary or hourly wage.
Commission-based jobs sometimes begin with a small base salary on top of which the individual earns additional compensation for sales goals they meet or a percentage of each sale he or she produces. Most group disability policies will cover between 50 – 66% of an individual’s base salary only. This means that if the majority of your income is produced from your commission, your group disability benefits are probably going to be insufficient should you neglect to take them into account when calculating your estimated disability insurance needs.
Then again, with a supplemental individual disability insurance policy, if you have a consistent history of commissions earned, the insurance carrier can consider those commissions as part of your income for the purpose of determining the amount of benefit you can purchase.
To get an idea of how much disability insurance coverage you will need, it’s beneficial to look at your earnings for the past few years. Calculate what you made from commissions and bonuses and then divide that amount to find the average, and then add that amount to your base salary. Once you have an understanding of how much you’d be losing if you were unable to work, talk to an insurance professional and see what he or she can do to make your didability insurance policy reflect your actual income rather than just your base salary. It could mean the difference between a secure safety net and financial disaster.
Because of the internet and other technology, the amount of people who work from home or as a freelance has increased significantly. Regretfully, many of these workers do not understand the need for a safety net like disability insurance in the event they are unable to work because of an injury or illness.
Most workers today are unaware that over 35 percent of the U.S. workforce is made up of freelancers, contract workers, and commission-only sales professionals. In fact, Entrepreneur.Com has posted several reports about the substantial changes that are taking place in America’s workforce.
According to a 2014 study commissioned by the Freelancers Union, 53 million Americans are independent workers — about 34 percent of the total workforce. This number is expected to balloon to 50 percent by 2020.
While the names associated with today’s non-full-time-employee workforce may vary — the “gig economy,” the “flex economy,” “on-demand labor, and the “external workforce” – one thing is for certain: In 2016, the non-full-time-employee workforce has already reached its true tipping point.” Read the full article…
For commission-only, freelance, or contract workers, having disability insurance coverage in place is even more important since working as an independent contractor rarely provides any insurance coverage.