The financial security given by disability insurance is simply a must-have for business owners, freelancers, and gig workers alike.
Disability insurance protects your most valuable asset—the capacity to continue earning the income on which you rely—against the risk of injuries and diseases. Without it, the financial consequences of an unforeseen disability can bankrupt your company.
Nonetheless, the need for disability insurance is sometimes neglected due to:
- misconceptions about how it operates and the likelihood of becoming handicapped.
- A time-consuming and perplexing purchasing experience.
It’s time to clear the air on self-employment disability insurance.
What is the Process of Disability Insurance?
Purchasing disability insurance protects your source of income from injuries and diseases. If you cannot work for an extended period due to illness or injury, disability insurance can replace a portion of your monthly wages while you recover. The benefit amount you get is tax-free income that you can use to pay bills, buy groceries, or do whatever you need to maintain your standard of living.
Disability insurance is classified into two types:
Long term disability insurance
It covers severe disorders that last more than three months (including chronic conditions), such as cancer, heart disease, arthritis, and back discomfort. Benefits usually begin 90 days after the onset of a disability and last for five years.
Short term disability insurance
It covers short-term injuries and illnesses that last less than three months and are usually recoverable, such as a broken wrist or maternity leave for pregnancy. Benefits typically begin 14 days following the onset of a disability and last three months.
Both types of coverage are available on an individual basis and as part of a group, such as an employer-sponsored plan. Employer-sponsored group coverage, on the other hand, is out of the question for self-employed people. This emphasizes the importance of having a personal disability insurance policy.
Now that you understand how disability insurance works, the question is whether you need it.
Disability insurance is frequently overlooked because you do not believe you will ever need it. This is entirely false. Consider the following data on the likelihood of disability and their cost impact:
- According to the Social Security Administration, 25% of today’s 20-year-olds will be disabled and unable to work for at least one year before reaching the average retirement age. It may happen to you.
- According to Life Happens, 70% of working Americans could not go a month without a paycheck without experiencing financial hardship. Every emergency reserve will eventually deplete.
- According to the Council for Disability Awareness, 90 percent of long-term disabilities are caused by illnesses rather than accidents. Although unexpected incidents sometimes occur, severe medical conditions are the most likely to keep you from working.
The likelihood of a debilitating incident occurring to you may be substantially higher than you believe. The negative financial implications it can have on you and your business is also not to be overlooked.
These findings highlight the importance of having a customized, individual disability insurance plan in place to preserve what you earn throughout your career.
Creating a Disability Insurance Budget
Disability insurance coverage costs typically between 1% and 4% of your annual income. Another rule of thumb is to plan to pay between 2% and 6% of your policy’s monthly benefit amount in premium. Of course, depending on your risk profile, you may spend more or less than these amounts.
The cost of disability insurance for self-employed people is determined by various policy options, such as benefit amount and waiting period length, and personal characteristics, such as health history and employment vocation.
In general, the younger you are and the healthier you are, the lower your monthly premiums will be. That is why it is prudent to establish a strategy early in your career to secure the cheapest rate feasible. You can always add more coverage later.
To determine your coverage requirements, make a list of your monthly obligations, necessities, and investing activity. Commitments include mortgage/rent payments, student loans, credit card payments, and other monthly debt obligations. Utilities, groceries, petrol, and any other recurrent expenses for you and your dependents are examples of necessities.
Online Purchase of Disability Insurance
Confusing paperwork. Pushy salespeople Weeks of anticipation. In the past, disability insurance was hampered by an old-fashioned method that left a lot to be desired.
Thankfully, Breeze is changing that. Breeze is dedicated to making cheap coverage more accessible as the first fully online disability insurance service.
This entails revamping long-term disability insurance for the modern workforce by creating a rapid, simple, and instructional consumer experience. Here’s what sets Breeze apart:
- Easy online application: Get a customized disability insurance quotation and apply online in as little as 10-15 minutes.
- Excellent client service: There are no commissioned salespeople here, simply a team of income protection professionals ready to answer your concerns.
Individual long-term disability insurance plans start as little as $9 per month.
Disability insurance, like any other sort of insurance, demands you to be proactive now rather than reactive later. That is why Breeze is committed to assisting American workers in protecting their hard-earned income in a timely and transparent manner.
As an independent professional, the onus is on you. Take the time to evaluate your disability insurance requirements and preserve your earning capacity today.
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