No employer means that no workers' compensation program is available to provide financial assistance in the event of an injury at work. Unless self employed disability insurance coverage has been taken out, that person is reliant on disability payments from Social Security. Sadly, a large percentage of people will not qualify for help and assistance. Ginger Applegarth of MSN Money said that: "More than 80% of the applicants fail the first time around." This can lead to short term financial difficulties whilst an appeal is lodged with the help of a disability attorney, not to mention a lot of stress, worry and anxiety in relation to the outcome.
Provisions of Self Employed Disability Insurance
Private disability insurance coverage provides a guaranteed monthly income should a temporary or permanent disablement mean that it is no longer possible to work. Following an agreed period of deferment, disability income insurance will replace up to two-thirds of any lost income for the short or long term. The level of premium will determine how good the coverage is, but costs and features will vary between different insurers. Always closely examine the terms and conditions of the policy before signing-up.
The Cost of the Best Disability Insurance Coverage
The cost of disability insurance for self employed people is determined by a number of factors. It is possible to change these determinants in order to improve affordability, but this can compromise the overall level of coverage. The main factors that affect premiums include:
- Period of deferment. The longer the amount of time that is allowed to elapse before self employed disability insurance coverage needs to pay out, the less expensive it will be. People with savings may wish to consider a longer deferment period.
- Income replacement. Although it is possible to replace up to two-thirds of lost income, it is less expensive to cover a lower percentage. As a bare minimum, consider how much money is needed to pay essential bills as it could be a while before a return to work is possible.
- Short vs long term coverage. Longer term assistance is clearly more expensive because it could mean that an insurer needs to make a payment to that person until retirement.
- Own occupation vs any occupation. An "own occupation policy" means that the insured is only obliged to accept work in their own profession. An "any occupation" policy will stop paying out if, for example, a builder could work as an office administrator. This policy type is far less expensive and easier to get approval for.
Why Disability Insurance for Self Employed People Matters
A private disability insurance policy is essential for anyone who doesn't have an employer as there is no workers' compensation program. It can also take many months to get Social Security to approve an application for benefits. Others will never receive state assistance. When attempting to recover from a serious medical condition, the last thing that person needs is money worries. After a period of deferment, disability income insurance will provide a valuable tax-free income until recovery.
Sources
Applegarth, Ginger. (Aug 20, 2008). "Disability insurance can save your life." MSN Money.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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