Long-Term Disability Insurance: Best Option for the Self-Employed
The main reasons why some people prefer working as a salaried employee instead of as a self-employed worker are the benefits salaried employees receive for sick days and disability leaves, usually being paid as normal days. While for most self-employed workers, a day you didn’t work is a day you’re not going to get paid. Long-Term Disability insurance is critical if you’re self-employed.
In those cases when workers aren’t able to carry out their normal activities due to major causes (illness or injury) and their income is unprotected, a long-term disability insurance policy is the best option in order to avoid bankruptcy and be able to keep paying your bills. But despite the benefits of a long term disability insurance policy for the self-employed, this option is not usually taken into account, as mostly because people aren’t well-aware of its benefits.
This article will shed some light on the details of why buying a long-term disability insurance policy can be the best investment for self-employed workers looking for stability.
Tips for Long-Term Disability Insurance Applicants
One of the most popular myths regarding long-term disability insurance is that the application process is difficult. But that couldn’t be further from the truth. The coverage will be determined by the amount of money you earn monthly.
So whenever you want to calculate how much you need in order to have a long-term disability insurance policy you must do the math this way:
- Figure out the amount of money you earn in a month
- Find your past two years of tax returns
- Calculate how much is the minimum you’d need to cover in order to keep your business running
Many self-employed workers have a hard time finding tax returns that prove their income, but that’s nothing to worry about. Insurance companies are well aware of these issues, and that’s the reason why they help future applicants determine documented and projected income.
There are many brokers and independent agents looking forward to helping you figure out how much coverage you need and what kind of policy is the most suitable for you.
Even though this process may take a while and collecting the requisites needed for a long-term disability insurance policy application can be a tedious process, it’s important to keep in mind that insurance is the only way you can protect your income and business when an injury or illness keeps you from working.
Once you’ve found a great agent to help you with your documentation the process is going to be very simple and easy to walk through.
Why Long-Term Disability Insurance is so Important for Income Protection
In order to build a level of safety comparable to what salaried employees have, self-employed people need to get long-term disability insurance. Otherwise, any eventuality will put an end to your entrepreneur-fantasy and all your efforts could end up as waste.
An insurance policy is the only way freelancers, small-business owners, etc., who don’t have a considerable amount of money in their savings accounts can overcome a situation where they’re unable to work. Nevertheless, it’s a very important task to look for an affordable policy.
The only way to do that is with an examination of the elimination period and the benefit period of the policy. “Elimination period” or “waiting period” is the term used for the period of time a policyholder will have to wait in order to start receiving the benefits after they have become disabled. The waiting period could go from a month to a year. Obviously, choosing to receive the benefits longer after the incident occurs results in lower premiums.
On the other hand, the benefit period is the period of time in which the policyholder will be receiving the benefits. Some benefit periods can even last until the policyholder retires, but most long-term disabilities last three years. This means a five year benefit period might be enough for many applicants, and it will cover the expenses of not being able to work.
When the Disability is not Long-Term
There are other types of policies like short-term disability which serves as a different option for people looking for a policy with lesser premiums. The main reason people do not buy these policies is that they are too expensive for most self-employed workers (having to pay a smaller amount than long-term but in a more limited period of time). Most workers prefer to go with the long-term insurance and pair it with an emergency fund in order to cover short-term inconveniences.
Most of the time the conditions the self-employed worker is under might have them needing a long-term disability insurance policy. However, the main reason they buy it is that the policy covers their financial difficulties during the time they’re not able to work. But how about the disability having longer effects, or preventing you from carrying out your work the way you used to? For these cases, there are residual disability benefit provisions that can be of great help for the policyholder. In this unwanted scenario, you aren’t able to keep working full-time, and you have to move to a part-time job, this policy can serve as a back-up to your income.
This is an excellent option to protect workers while they’re rebuilding a business or recovering from a disease that requires frequent treatment during working hours.
The Ultimate Benefit of Long-Term Disability Insurance: Peace of Mind
Last but not least, the biggest benefit of long-term disability insurance is that you won’t have to worry about your income if you become disabled. In case you need to go through a recovery process, you can focus 100% on getting back to normal and feeling well again. If you spend the whole day thinking about your income, then the process will be slower and more difficult.