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Can You Get Disability Insurance If You Are Self-Employed?

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November 8, 2022


Making the change to the self-employed life comes with plenty of perks– however, in many cases, it also means saying goodbye to the sweet insurance coverage plan your last company offered, leading you to wonder.

Can I get disability insurance if I am self-employed?

The good news is that you can replace your last policy and purchase a disability insurance plan to cover yourself if something were to ever happen. Better yet, you can get a plan that meets your individual needs even better than your previous company’s umbrella policy. Because we ALWAYS recommend having this type of coverage– especially if you work for yourself.

Interested in learning more about how disability insurance can help you? Keep reading to learn more about what coverage options exist and how to start the path of getting your own policy today.

Prefer to skip the reading and jump right to getting a quote? Let’s look at getting you covered today!

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Why Should You, A Self-Employed Person, Purchase Disability Insurance?

Disability insurance– or commonly referred to as accident and sickness insurance– protects your most valuable asset: your ability to earn an income. It is a living benefit that would offer you financial protection if you were to become sick or injured and were unable to work for a period of time.

This benefit is especially important if you are self-employed or a business owner, as it could help you replace at least part of your business income. And help you cover things such as your monthly business expenses and employed workers’ salaries. Meaning this could be the difference between saving or losing your business and everything you work so hard to create.

What Are Some Risks/Scenarios When A Self Employed Manitoban Would Want Disability Insurance

You, a self-employed person, should have a disability insurance plan regardless of the type of business you’re in. Simply living in the world puts you at risk of getting a disability or illness that could impact your ability to work.

A “disability” can be defined in many different ways. While the traditional thinking of a disability implies a physical impairment (someone is very sick or injured, for example), other disabilities are not as overtly obvious – such as mental health challenges.

As such, in any line of business, a self-employed person should look to have some type of disability policy. If you rely on your income to survive and would be at a loss if you could work for a few weeks (or months!), then you need an individual policy.

The Difference Between A Self Employed Private Policy And A Group Policy

There are various ways that a health insurance plan could be set up. If you previously worked for an employer, you were probably part of a group insurance plan. If you are now self-employed, you’d probably be looking to set up a private policy.

A group insurance policy is an insurance policy that is for all employees of a business, including the owner. This plan usually includes life insurance, short and long-term disability (and other benefits such as health and dental). Group insurance plans are not unique to each individual, as each employee has the same type of policy, regardless of their unique conditions or needs.

An individual policy is an insurance policy created based on the individual’s needs. The policy will be underwritten (risk assessed) based on the individual’s needs. Things such as back pain, mental health, or pre-existing conditions may result in exclusions.

There are several different types of individual disability policies based on the unique needs of each individual – it is best to speak to an Insurance Advisor to determine the best plan for you.

The Difference Between Long-Term And Short-Term Disability Insurance

Short-term disability usually refers to coverage that is temporary in nature. It is generally for less severe illnesses or injuries that put you out of work for a bit but where you recover within a few months.

Long-term disability, however, is designed to last much longer. It covers more serious ailments (months to a year) and includes permanent disability. There usually is a set time limit before short-term disability turns into long-term disability.

Does This Apply To Self-Employed Individuals?

There are no separate short-term and long-term disability options for individual policies.

When choosing a policy, you can pick the waiting period, referring to the time before your policy kicks in. The longer the waiting period, the lower the premiums typically are. The insured usually determines the waiting period based on cost, benefits, and financial situation. Note there may be an elimination period or minimum waiting period before you can start receiving your monthly benefit to ensure no direct offset with other benefits are being received (e.g.: EI sickness benefits).

You can also choose the benefit period – the max amount of time the benefit will pay you. This will determine how long you will get coverage. We almost always recommend going with the longest benefit period you can (which is typically to age 65). If something happens and you’re unable to work for years, you’ll be glad you have some financial stability and protection.

Having an extended benefit period offers coverage most similar to long-term disability. Note that the longer this period is, the more expensive your premiums will be.

How Much Does Disability Insurance Usually Cost For A Self-Employed Person?

As much as we’d love to provide you with a typical cost for a disability policy, we cannot do so, many factors go into determining your individual plan and plan fees.

Some of these factors used are age, gender, occupation (how dangerous it is, and how easy it is to return to work if something were to happen), income, waiting period, benefit period (the maximum amount of years the policy will pay), benefit amount, and additional riders (product options/ add-ons).

Note: Obtaining an individual disability policy can be very challenging if you have an extensive medical history. It’s also worth noting that your policy is not taxed deductible as it is a personal expense, not a business expense.

If You Want Disability Insurance, What’s The Process To Get It?

We’re not going to lie to you. Getting a disability insurance plan takes more work than getting car or house insurance. However, trust us when we say it’s worth it!

A bit of time upfront can end up saving you so much headache and financial stress later on. And with a team of Insurance Advisors in your court (that’s us!), this process is even easier.

If you’re looking to get a policy, here’s generally what you’ll need to do:

  1. Speak with an Insurance Advisor to determine your needs
  2. Complete an application
  3. Provide any required medical and financial information for underwriting
  4. Accept the policy as applied or modified (e.g. exclusions) by the insurance company. In some worst-case scenarios, the application is declined.

After this process is complete, all you have to do is pay your monthly premium and file a claim if anything were to happen.

Ready To Get Insured? Let Us Help!

As a self-employed person, getting a disability insurance plan is one of the most critical things you can do. Although we like to think we’ll never need this sort of protection, the truth is that things happen. Even just a month or two of not being able to work can really set you back and, in some cases, be enough to run your company (or finances!) under.

Think of disability insurance as a small cost to get the peace of mind you deserve. Reach out and get a quote! From here, we’ll connect with you and help you determine what plan makes the most sense for you and how we can make it fit within your budget.