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I’m Self-Employed. Do I Need Disability Insurance?

Posted by Valencia on January 29th, 2008

Depending on who you talk to, telecommuters live a pretty nice life. They can work in their pajamas, take time off, even sleep late. But, there is one aspect of work at home life that rarely receives attention.

There are different types of telecommuters. You have the traditional telecommuter who’s likely a self-employed business owner or independent contractor. They primarily work off-site and complete projects/assignments for companies. In contrast, you have actual company employees who have the privilege of working from home. Their freedom is limited. Hence, they usually have to submit weekly time sheets and check in with their employer throughout the day.

When making the decision to work from home, a few people explore the option of becoming a telecommute employee. True, you give up a measure of freedom and flexibility. However, you’ll enjoy several employee benefits such as paid vacations, paid health insurance, and disability insurance.

Every work at home telecommuter knows the importance of having some type of health coverage, and they are prepared to pay this cost out-of-pocket. It doesn’t have to be the best…anything is better than nothing. Yet, many telecommuters skip disability insurance.

If you were to become pregnant or seriously injured…could you survive financially?

Without disability insurance, there’s no maternity leave or short-term disability benefits. Life happens, and you’re not invincible. Therefore, it’s important for every telecommuter to have a backup plan.

Getting self-employed disability insurance is tricky…and expensive. Many insurance providers don’t offer self-employment coverage. They reason….there is no way to prove that the person actually works 40 hours a week.

Isn’t the proof in the tax return?

Anyway, a few companies provide insurance, and they use a tax return to verify income. Still, disability benefits are only 60 percent of your net income, which may not be enough. Consequently, you’ll need to establish an emergency fund.

Start small and put aside $30/per week. After two years, you’ll have more than $3,000!

The extra cash comes in handy if you have to temporarily stop working due to pregnancy, injury, surgery, carpal tunnel, etc.

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Reader Comments

That’s a good call. It’s always better to be safe than to be sorry.

I would be able to survive. I pay for my own insurance and put aside money for this purpose. I have stocks. I also have an emergency savings fund. I could be out of work for at least a year before I had to think of working. Also the money I make online through my websites and freelance writing is my backup plan. That money goes into savings and investments.

All good points. I pay for my own health insurance and life insurance, but have only tossed around the idea of disability insurance. Do you have any suggestions on where to start with this - any good plans that you know of with reasonable premiums for self-employed? I’ve got some emergency funds, but as a single parent, I do worry about “what if.” Thanks for the post, and I’ll be watching futher comments here if you have any suggestions on where to start this process.

@ Opal - That’s a terrific backup plan. One of my short-term goals is to create a cash reserve equal to at least six months income. We’ll see how it goes! :-)

@ Suzanne - As a freelance writer, I couldn’t get a disability insurance policy. However, several companies offer coverage to other types of telecommuters. I would suggest talking with an insurance agent. I have a friend who’s an insurance agent, and I received a Universal Life policy. Once the policy matures, I can withdraw money in the event of short-term disability. Plus, I put aside money in an emergency savings account.

Mauvaises récoltes pour certains produits, il faudra attendre l’année prochaine : pas de lentilles , pas de noix , ni d’huile du coup!

Your favorite justification appeared to be on the web the easiest thing to be aware of. Thanks for sharing.

One type of insurance that is available and should be considered is disability insurance.There are two types of disability insurance policies. The first is for short-term disability which is a term of two to five years. This type of disability insurance is suitable for those who know that they will need to be out of work, perhaps for a scheduled surgery, for cancer treatment, or for the birth of a child.The second type of disability insurance policy is long term disability.It is important to note that there are almost no disability insurance policies available that cover 100% of the individuals salary.

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