Learn how disability insurance works

Self Employment Disability Insurance

Filed under: Disability Insurance — Alston @ 7:56 pm February 25, 2011

Disability insurance can replace most of your income when you are sick or injured and unable to work. What kind of insurance is more important?

Some people mistakenly believe that certain types of personal insurance are only available as part of a benefits package offered through employers. Fortunately this information is false. In fact individual or self employment disability insurance can be cheaper.

Some people also believe that Social Security benefits will take care of them when they are disabled. It usually takes years to qualify for the Social Security program. The benefits are low. Most people are denied when they request benefits.

Workers compensation sometimes pays a benefit. However, workers comp will only pay if your disability is job related.

The benefit money you get from a claim filed on an individual disability insurance policy is just a spendable as money you might get from a group policy. In fact without this money, many people would have had their homes foreclosed. (More people lose their homes because of a lack of health and/or disability insurance than those who lose their homes due to a layoff.)

The money can be more spendable, actually. Disability insurance income isn’t taxable when purchased by individuals in most cases.

Disability insurance is available to pay the self-employed as well as to other individuals who are not affiliated with a large employer. It is often available to the selfemployed at a very affordable rate.

Insurance that you purchase on your own, like disability insurance is often not only less expensive but it is also more portable. Both of these facts can mean that you get a better deal when you purchase a policy for yourself.

Group disability insurance is often available with no medical questions asked. You can qualify based on information such as your employee status, your pay and the number of hours you work. Since the insurance company doesn’t get to ask you medical questions, they charge the sick and the healthy based on the same claim expectations.

This can mean that those who are healthier are overcharged. Because of this some people are able to get a lower rate by purchasing long term disability insurance for individuals.

An even more important issue that price may be portability. When disability insurance policies are tied to jobs, the policyholders are actually the employers. This means that you can lose the coverage if you leave your job and if you are in ill health at that time, you may not qualify for an individual policy.

Buying insurance through employers also means that you have less choice regarding the plan’s design and the benefit. When you purchase as an individual whether self employed or not, you will have more plans, plan types, providers and options to choose from.

You may also find that no income taxes are taken out of the money received when you file a claim. (You are likely to have income taxes taken from your disability income check if a business paid for the policy.)

This is not the case with individual disability insurance. Since your coverage is not tied to your employment, you stay protected even if you switch jobs or decide to opt for self-employment. This means that if you get sick while between jobs, you may still be able to file a claim.

This means that if you are less healthy five years from now, you can still maintain your protection. This isn’t necessarily the case if you purchase the coverage through one of your jobs.

The coverage a typical benefits package people typically get from large employers can be duplicated or nearly so, by the self-employed. You probably already know that companies like Blue Cross will sell health insurance to you directly. Companies that offer disability insurance will also sell and will pay claims to individuals including the self-employed.

You can find prices and information regarding disability insurance for the self employed on our site.

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