Why Disability Insurance for Freelancers Matters
Freelancers are on the rise. According to the Freelancers Union, 54 million Americans did freelance work in 2015. That’s a seven percent jump from the previous year. Online networks and other freelancing sites are making it easier to find work as a self-employed individual. Additionally, many companies are contracting out work to freelance employees as an alternative to full-time hires. Despite numerous benefits, freelancers can be at a disadvantage when it comes to protecting their assets. Without the safety net of a major corporation, freelancers often have to fill in the gaps by finding disability insurance for freelancers. As a result, many freelancers forgo important forms of coverage, including disability insurance.
Why Freelancers Need Disability Insurance
Just like any other working professional, freelancers face the same odds of becoming disabled at some point during their career. One in four of today’s 20-year-olds will become disabled at least once before they reach retirement, according to the Council for Disability Awareness. Going without disability insurance puts freelancers in a risky financial situation. A serious injury or illness will prevent a freelancer from doing their job, stifling their ability to earn an income and sending their medical bills through the roof. Without employee benefits, freelancers would have few optionsWithout employee benefits, freelancers would have few options if they were no longer able to work in the same capacity.
How Disability Insurance for Freelancers Works
Disability insurance usually recoups about 60 to 70 percent of the policyholder’s monthly income. Yet a freelancer’s income can vary by the week. Therefore, insurance companies use an applicant’s income tax returns to establish a monthly benefit. Freelancers need at least two years of income tax returns to prove that freelancing is their main occupation. The insurance company will average a freelancer’s yearly earnings over the course of those two years to establish an average monthly income. IF the freelancer becomes disabled, they will receive the same monthly benefit regardless of how much they were working when the disability began.
The Best Kind of Disability Insurance for Freelancers
Freelancers should look for disability insurance policies that are non-cancelable and guaranteed renewable. Guaranteed renewable means that the insurance company cannot cancel the policy under any circumstances unless the policyholder stops paying their premiums. A non-cancelable policy means that the insurance company cannot raise the policy’s premiums or change the policy’s terms.
Disability insurance for freelancers Disability insurance for freelancers should also contain an own-occupation rider. An own-occupation rider dictates what constitutes as a disability. If a freelance web designer lost the use of their hand, the one they use to write code, they would qualify for full disability benefits even if they were still able to work in other capacities. Without an own-occupation rider, freelancers would lose their monthly benefit if they took another job in a different industry, even if it only paid a fraction of their previous monthly income.