What Freelancers Should Know About Disability Insurance

If you get hurt and are unable to work, disability insurance can make sure that you continue to get the money you need to pay your main expenses. For the self-employed and freelancers, disability insurance can be even more important, as there will be no employer or policies in place to help in case of injury. Thankfully, there are a lot of different ways self-employed individuals can get disability insurance. But, before choosing a plan, it’s a good idea to understand what the different plans entail to make sure that they cover what you need specifically. 

The 2 Types of Disability Insurance

In general, disability insurance can be categorized into two different types: short-term and long-term. As the names suggest, short-term disability insurance will pay out a portion of your previous salary while you take time to recover and get back to work. In most cases, these policies won’t exceed more than six months. Long-term disability insurance, on the other hand, will continue to pay you for more than six months. Long-term plans, then, are more designed for individuals who have suffered serious injury or disability.

In both cases, long-term and short-term, disability insurance requires you to wait a set “elimination period” before you’ll receive any benefit amount. The reason for this is to ensure that you really are unable to work and, therefore, need the plan to help cover expenses. If you’re able to go back to work more quickly, then the disability insurance will not pay any benefits. 

How Freelancers Can Get Disability Insurance

There are a lot of providers for disability insurance, which means you have a lot of options to look at when choosing a policy. As you look at your options, you’ll notice that the cost is dependent on a few different variables:

  • The overall length of the elimination period (how long you will need to wait after you can’t work before receiving your plan benefits)
  • The length of your benefit period (short-term or long-term)
  • The requirements needed to meet the policy’s definition of “disability” (some are much more strict than others)

In terms of disability requirements, you’ll find that there are typically two types of definitions: own occupation and any occupation. Own occupation requirements mean that you will need to demonstrate that you’re unable to do the job you previously held before becoming disabled. Any occupation, on the other hand, means that you’re unable to do any job. As you might guess, “any occupation” requirements are far more strict than “own occupation”, which means that the plan will actually cost less money. (The less likely an insurer will have to pay your benefits, the lower the plan will be.)

Looking closely at these variables before selecting a plan will make sure that you’re investing your money in disability insurance that’s right for you. While there is a disability plan provided to everyone by the U.S. Social Security System, it’s important to know that qualifying for this program is difficult, as the definition of disability is very strict. 

With a set of insurance and financial services specifically created for freelancers, CareerGig can help you find the best fit for your needs. Learn more about insurance for freelancers here.