What Freelancers Need to Know About Insurance

For a lot of self-employed individuals and freelancers, the cost of insurance can feel like a lot, especially since it’s coming directly out of your own pocket. Of course, the cost of not having insurance can be equally as high (if not significantly more). Insurance, whether home, auto, or health, ensures that you’re protected, especially in the case of emergencies and unforeseen disasters. With insurance, your finances are safeguarded and you can even be reimbursed for losses. Without insurance, a variety of accidents can lead to expenses that simply can’t be covered — and the result of that can be financially, and personally, devastating. 

Looking at How Insurance Actually Works

It’s likely you’ve heard different people, at one point or another, complain about how insurance “really doesn’t do anything”. These sentiments can lead you feeling like investing in insurance really isn’t worth it. Of course, insurance does work, you just have to understand what it’s meant for and what it will cover so that you’re not disappointed down the road. 

While you’re familiar with the standard types of insurance most individuals have, it’s interesting to note that there are hundreds, if not thousands, of types of insurance, plans that will cover virtually everything and everyone — if, of course, you’re willing to pay for it. The most common types of insurance for average individuals are:

  • Auto
  • Homeowners
  • Life
  • Health

By law, the United States requires individuals to have auto insurance. And, almost all mortgage companies will require you to have homeowners insurance at the date of purchase. Even renters are almost always required to hold renters insurance in order to sign an official lease. 

As you start to look at insurance policies, understanding how they work will allow you to see their value, making the monthly cost of most plans feel more manageable when they hit your bank account. Regardless of the type of insurance you’re choosing, you’ll need to understand the three basic components of all insurance policies: premiums, policy limits, and deductibles.

  1. Premiums. The premium of your insurance policy is the cost you’ll pay to keep your plan. Most premiums come in the form of a monthly cost. Premiums vary from individual to individual because they take into account personal variables.
  1. Policy Limits. Your policy limit tells you the maximum amount that your insurer will pay. Depending on the type of insurance and your individual plan, your policy limit can be set to an annual term or specified for each claim. In some cases, policy limits  entail the total amount that will be paid over the lifetime of the policy (“lifetime maximum”). 
  1. Deductibles. Every insurance policy comes with a deductible, which is the amount the individual must pay before the insurance will kick in. The larger a deductible, the less the premium will be; the smaller a deductible, the higher you’ll see your monthly premium. 

As you look at insurance plans, you’ll want to consider your specific needs. In terms of health insurance, for example, if you have chronic health issues you’ll want to look at policies with lower deductibles so that more of your visits and services will be covered by insurance, off-setting the higher monthly cost.  

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.

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