Disability coverage for independent contractors

What Is Disability Insurance for independent contractors?

As an independent contractor, finding the right disability coverage can be difficult. Traditional disability insurance is not designed for your particular situation, and often has exclusions that make it of little use in covering you during this time. As an independent contractor, you may not be able to take time off to recover from an illness or injury because there is no one to take over your duties. Yet, you still need insurance that can address these gaps and stay with you even during these tough times.

Disability insurance for independent contractors is not the same as typical traditional coverage that most people are used to seeing. This type of coverage is designed specifically for people who have limited or no employer-sponsored long-term disability protection offered through their jobs. It can be purchased as a stand-alone policy, or as part of a small group disability or critical illness plan. It can also be obtained in conjunction with a short-term disability plan.

Disability coverage for independent contractors

1. Your Own Business

If you own your own business, or work as a full-time independent contractor, you need to consider how your situation can affect disability insurance coverage. The fact is that most people who are self-employed are unable to purchase the same level of coverage their employer would provide them. This can be very risky in regards to your finances and quality of life if you do not plan carefully for this possibility, and take steps to protect yourself. Disability insurance for independent contractors is designed specifically for people who have limited or no employer-sponsored long-term disability protection offered through their jobs. 

2. Short-term Disability

This type of insurance coverage is designed to provide temporary benefits in the event you can’t work due to illness or injury. Short-term disability policies usually have a maximum time period of six months that they will cover you for before presenting a claim, and charges per day and per week for the coverage. They are often purchased in conjunction with health insurance, and can be very cost-effective if used appropriately along with your other medical coverage.

3. Long-term Disability

This is the type of coverage that will kick in when you have a disability that lasts longer than six months. It is often purchased as a stand-alone policy due to the more permanent nature of this type of insurance. Many long-term disability policies require you to have some form of health insurance, and they typically cover 60% to 70% of your income if you cannot work due to illness or injury. It can be costly, but well worth it if used correctly. There are many companies that offer long-term disability coverage for independent contractors, so do your research before choosing one.

4. Critical Illness/Medical Expense

This type of coverage is designed to pay a lump sum of money to someone who has a critical illness, or who experienced an unexpected medical expense. This can be useful if you are no longer able to work due to a serious illness or injury, and do not have any other sources of income. It can be purchased as part of a group health plan, or as an individual policy on the private market. Disability insurance for independent contractors is intended for people who have limited or no employer-sponsored long-term disability protection offered through their jobs. It can also be purchased as part of short-term disability, long-term disability, or critical illness coverage within group policies.

5. Medicare Supplement Insurance

This type of coverage is designed to allow someone who is disabled or aged to continue receiving medical care from Medicare. It usually covers 80% of all medical expenses in the most basic level, and can extend that amount for those with high cost-sharing requirements for a particular service. It cannot be purchased on the private market, and must be purchased through a Medicare supplement policy.

6. Employer Medical Sharing Plan or Flexible Spending Account (FSA)

These plans are designed to help defray employee medical expenses on top of an employer’s traditional long-term disability coverage, short-term disability plan, or critical illness plan. They typically will pay for the employee’s portion of their medical expenses, and sometimes even a portion of their medical insurance. This can be very useful in ensuring you have all of your bases covered during this time.

Disability insurance for independent contractors is intended for people who have limited or no employer-sponsored long-term disability protection offered through their jobs. It is also available as part of short-term disability, long-term disability, or critical illness coverage within group policies.

7. Contract Disputes and Independent Contractor Benefits

Contract disputes are becoming more and more common between contractors that are working on a contract basis, and their employers. As an independent contractor, you have very little job security, and sometimes your employer can cut back on your hours or pay, without warning. If this happens during a time of disability, it may be difficult to prove that they did so purposely in order to put you out of work.

Disability insurance for independent contractors is designed specifically for people who have limited or no employer-sponsored long-term disability protection offered through their jobs. It is also available as part of short-term disability, long-term disability, or critical illness coverage within group policies.

8. Life and Health Insurance changes if You Become a Contractor

Many people tend to forget about life insurance and health insurance when they become independent contractors. They think that if their business does not do well, they will not need either. However, life insurance can be very important for contractors to protect their families in the event of a loss of income due to death or disability. It also helps protect your assets if you are unable to work. Many employers provide life insurance coverage as part of their group health plan as a benefit, but it is still important to take out life insurance coverage on your own as well if you do not have any employer-sponsored health coverage. Disability insurance for independent contractors is designed specifically for people who have limited or no employer-sponsored long-term disability protection offered through their jobs.