Do You Need Disability Insurance? A Guide for the Self-Employed

Do You Need Disability Insurance? A Guide for the Self-Employed

If you work as a freelance writer, Uber driver or other member of the gig economy, you need to protect yourself and your financial interests. Without the security of a corporation or the surety of an employer behind you, it is up to you to put those protections in place.

One of the best ways to protect yourself and your financial interests is by putting the right insurance coverages in place. Some types of insurance coverage are obvious, while others are easier to overlook.

Among the most important, yet most often overlooked, types of coverage is disability insurance. For those working in the corporate world, this type of coverage is generally part of the fringe benefit package, but the self-employed do not have this luxury. As a self-employed individual or gig worker, you need to provide this vital protection for yourself and your family.

So do you need disability insurance for your self-employment endeavors, or can you afford to forgo this type of coverage? The answer depends on your circumstances, your income and any other employment you may have in place.

Are You Covered Elsewhere?

If you do gig work on the side to supplement your full-time income, you may be able to forgo the protection of additional disability insurance. Those who work in the corporate world typically have access to some type of disability coverage–insurance that generally replaces a portion of their income if they are unable to work.

If you are employed full-time, or even part-time, check with your employer to see what type of disability insurance you have in place. If the disability coverage is not sufficient to cover your needs, you may be able to purchase additional protection at favorable group rates.

How Much Do You Rely on Your Self-Employment Income?

If you do not already have disability insurance in place through an employer, the next question to ask yourself is how much, or how little, you rely on your self-employment income. Are you retired and using your Uber earnings or freelancing money to purchase a few luxuries, or do you truly rely on the income you earn to meet your daily expenses and make ends meet?

If you have sufficient retirement or other income in place and do not rely on your self-employment income, buying disability insurance could be an unnecessary expense. Disability coverage for self-employed individuals and gig workers can be costly, and if you do not need the protection, it may be best to go without it.

If, on the other hand, you rely on your self-employment income or gig work to make ends meet, disability coverage is a must. When you are self-employed, your income solely depends on your ability to work, and even a small accident could leave you without an income for weeks on end.

It is easy to overlook the need for disability coverage, especially with so many other things to think about. Even so, disability coverage can be a lifesaver for the self-employed. If you do not already have this coverage in place, it may be time to explore your options.

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