When you work as a freelancer or run your own business, everything depends on you, which can make it difficult to take even one day off from work. But what if you became sick or injured which prevented you from working and making an income? How would your business or practice stay in business? How would you make a living? Would you be able to sustain your lifestyle for weeks or even months? Disability insurance (or disability income insurance as we like to call it at Asteya), is your financial safety net should the unpredictable happen. Disability isn’t just a theoretical possibility, in fact, one in four working adults will become disabled during their working years.
Why does every freelancer need disability insurance?
Disability insurance, or income insurance as we like to call it at Asteya, is a policy that supplements your income in the event you’re unable to work due to illness or injury – you can think of it as your financial safety net. Disability insurance is often time overlooked because people either are unaware that it exists or have the wrong idea behind what it actually is.
As a freelancer, you’re responsible for providing a certain service or maintain your business. Quality and consistency in your work are really important to keep making money. While there are many advantages to working for yourself, a generous benefits package that a corporate employer offers you is probably not one of them. Because you lack the robust security that an employer might provide you with, you become responsible for safeguarding what you deem necessary and important - health, life, car, and home insurance are the common policies that we tend to go for. But what about a policy protecting your income in case you become too ill or injured to make one?
“I have an emergency savings account that I can rely on, I don't need disability insurance"
Even if you have enough savings to provide you with a safety net when the unexpected happens, disabilities are unpredictable and can happen anytime, anywhere, not to mention, they can last for weeks, months, or even years. Even if you have enough money saved to cover you for 6 months, your inability to work could extend beyond that – then what? There are also no restrictions with what you can spend your disability benefit on, which means that you could use it to pay for medical bills, deal with any other unexpected expenses, or simply to just pay your grocery bills.
“I can get benefits from SSDI, I don’t need additional coverage”
For some people that become disabled, they can get Social Security Disability Insurance (SSDI) benefits from the Social Security Administration (SSA). However, disability benefits from Social Security are insufficient. The payouts can be small and limited.
As of 2021, the average monthly payment received by people with a disability through social security benefits is approximately $1,280 per month, or $320 per week, which is usually not enough to meet basic living costs, let alone retirement and other long-term goals. Having a private disability insurance policy can be the best way to protect your income sufficiently as it typically covers 60-80% of your income as a freelancer.
“Disability Insurance is super expensive, I’m not sure I can afford it”
Protecting your income shouldn’t be a luxury, so here at Asteya, we’ve created affordable and easy solutions that won’t drain what you’re trying to protect (your income!). We offer disability insurance (or disability income insurance as we like to call it) that’s simple, fast, and affordable. Our 100% digital process means we don’t tire you out with proof of income, medical exams, phone interviews, or wait times, so you can go from applicant to insured in no time. Our prices start as low as:
Permanent Disability Income Insurance: starting at $6.05/month
Sickness & Injury Disability Income Insurance: starting at $5/month
How much disability coverage do freelancers need?
How much you pay for disability insurance as a self-employed person is determined by several factors, including the policy options you choose (such as the benefit amount and waiting period length) and your individual needs (such as your health and the nature of your business). Your premiums will always be lower if you sign up for health insurance when you're still young and healthy.
To better help you understand how much coverage you may need, look at the areas in your life that need to be covered and then calculate, how much you spend on each monthly:
- Loan payments
- College savings and/or tuition
- Retirement savings
- Auto expenses
- Any other recurring bills
Then, look at your monthly business costs:
- Rent or mortgage
- Pay, benefits, and other forms of payment
- Loan payments
If you have a lot of money in savings or other liquid assets, you can take those into account and change what you need. You may also decide later that some expenses aren't necessary. However, when you start looking for a policy, you need to have a good idea of how much your personal and business expenses are.
How much does disability insurance for freelancers cost?
Insurance companies underwrite disability coverage based on the likelihood of a claim being filed by an applicant. They also consider how much and how long a person can receive those benefits.
You should also know that your profession has a significant impact on your premium rate. Insurance companies classify jobs based on their hazards, as some are more prone to injury or illness than others. Different jobs are classified according to their level of risk.
Your career may also be evaluated based on how difficult it is to return to work after an injury or illness. The more difficult it is to perform a job with certain injuries or illnesses, the higher your premium will be.
Your needs and way of life are unique to you, just like your business has its own customers, processes, assets, and liabilities. When it comes to a disability insurance policy for freelancers, it needs to be customized with a specific benefit amount and length that addresses these needs.
A policy with a smaller benefit, a longer waiting period, and a shorter benefit period will cost less than one with a larger benefit, a shorter waiting period, and payments that last until retirement.
Your premium costs will also depend on things like your age, gender, lifestyle, and job. On average, a policy that gives you the coverage you need will cost between 1% and 3% of your annual income.
How to apply for disability insurance as a freelancer
First and foremost, you should make sure that any coverage you purchase is both guaranteed renewable and cannot be canceled. So long as you keep paying your premium, the insurance company is bound by the terms of your policy and cannot cancel it or alter its conditions in any way.
Nothing beats the satisfaction of paying the premium of a 20-year-old when you're in your fifties, so this is especially significant if you're buying the coverage when you're young and healthy.
Asteya’s disability policy is the right fit for you. It’s quick, easy, and totally online.
At Asteya, applying for disability insurance as a freelancer is incredibly simple. The application is completely digital so there’s no need for medical exams, blood tests, phone calls or lengthy paper applications. Asteya's underwriting occurs in real-time which means you can obtain a policy in 30 minutes or less!
What are the typical extras that freelancers should add to their insurance?
Own-Occupation Rider: With the Own Occupation rider, if you become totally disabled, you will be considered disabled in your regular job (the job you had on the day you became disabled), even if you go back to work doing different tasks or find work in a different job. It’s recommended that disability insurance for freelancers
should include an "own-occupation" rider. For example, a self-employed web designer would be eligible for full disability benefits if they lost the use of their hand, the hand they use to create code, even if they could still work in other capacities. Without an "own-occupation rider," a self-employed person would forfeit their monthly benefit if they could still perform at a different job regardless of it being in their field or not.
The bottom line
No matter your occupation or your background, disability insurance should be one of the main policies that you should consider getting. The peace of mind that comes with having disability insurance is knowing that you and your family's living expenses will be covered no matter what happens to you.
If you're still on the fence about whether disability income insurance is for you (hint: it is), here are a few extra points to consider while thinking about it:
- Asteya’s policy is a no-brainer, seeing that it is 100% digital. We don't require blood tests or doctor's appointments, unlike other insurers. We'll just ask you a few questions to determine your best policy.
- You’ll be all set once your policy is in place! You'll pay your premiums quarterly, monthly, or annually for the duration of your policy.
- If the unexpected happens and you need to file a claim, our team will be there to assist you in receiving the funds you require as soon as possible. When your claim is approved, you'll receive a payout that you can put toward whatever you need, such as bills, groceries, or medical expenditures.