Disability Insurance for Self-Employed: Cost, Coverage & Best Options

Short and Long Term Disability Insurance Costs for Self-Employed
Image by DCStudio on Freepik

Disability insurance is especially important for self-employed people to have. Self-employed people can get disability coverage from private insurance firms. Self-employed individuals can obtain disability insurance at a very low cost. Different factors, like age, health, and income, affect how much a policy costs. Understanding the distinction between short-term and long-term disability coverage is crucial.

Disability Insurance for Self-Employed 

If you become ill or injured and are unable to work, disability insurance can help ensure that you will still be able to put food on the table. The lack of sick days and vacation pay for the self-employed makes disability insurance all the more crucial.

If you are self-employed and become ill or injured and unable to work, disability insurance could help replace some of your lost income. Individuals can get disability insurance through Social Security and some state programs, or they can purchase a policy directly from an insurance company. 

When you are self-employed, you can buy your own disability insurance policy rather than participate in a potentially more expensive group plan through your employer. A group policy may still be an option if you and your partner do not have access to one through your respective employers.

Disability insurance is a useful tool for the financially secure self-employed person. You can get both short-term and long-term disability policies, but getting long-term disability can be harder because you may need to show proof of a steady income and more money to cover your business’s costs. 

Self-employed individuals can obtain disability insurance through a private insurance provider. In the same way that employees can obtain disability insurance, self-employed individuals can as well. Disability insurance premiums tend to be cheaper for younger, healthier self-employed people and more expensive for those in high-risk professions.

What is Disability Insurance for Self Employed

Disability insurance safeguards a person’s financial security if they become disabled due to illness or injury and are unable to work. Lack of paid time off and sick days makes disability insurance crucial for self-employed people. Self-employed people wishing to buy disability insurance should consider how to qualify, the types of policies, what they cover, and how much it costs.  

How Does Disability Insurance Work?

Is it possible for you and your family to survive without your income if you get sick or hurt and cannot work for months? For many, the answer is no. 

That is why it is crucial to have disability protection. It helps make up for the money you and your company are not making while you get back on your feet. Typically, the premium you pay each month will equal about 60% of your take-home pay.

How To Qualify for Disability Insurance If You’re Self-Employed

When deciding who is eligible for disability insurance and how much they will have to pay in premiums, insurance companies look at several factors. Factors that influence a person’s insurance premium include their age, gender, occupation, health, and household income.

Some medical conditions may disqualify you from receiving disability insurance benefits. This includes people with cancer, blood disorders, MS, arthritis, and other serious illnesses. Even minor problems like tiredness or dizziness can cause your application to be turned down because they can sometimes lead to more problems.

Your insurance company will look at how much money you make to decide how much coverage you will get. Disability insurance premiums are underwritten in the same way for both employees and self-employed individuals.

To verify your annual gross income, you must submit tax returns with your application. In addition to your income and credit history, the underwriter will look at how much money you currently have. When determining a policy’s premium, an insurance company will also look at factors like a business’s annual revenue and employee count.

Coverage of Disability Insurance for the Self-Employed

When you buy disability insurance, the risk of financial hardship due to your inability to work is mitigated. However, disability insurance can help offset some of the financial impact by replacing a portion of your regular income.

Disability insurance policies vary in how much of your income they will replace. Plans for short-term disability tend to cover a larger portion, up to 80% of your income. With a long-term plan, you might get less money, but it could still cover up to 60% of your monthly income. Usually, self-employed people can get a bigger chunk of their income back than people who work for someone else. 

Disability Insurance for Self-Employed Cost 

Self-employed disability insurance costs may change depending on several factors. Among these are the length of time you will be disabled, the percentage of your income that will be replaced, the length of time you will have to wait before receiving benefits, whether or not your policy is cancelable or renewable, and the availability of optional riders. Self-employed disability insurance costs may also change each month based on your health, where you live, gender, age, and whether or not you smoke.

Self-employed people can get disability insurance at a very low cost. How much a policy costs depends a lot on your age, health, and income. Disability insurance premiums are heavily dependent on the insured’s regular monthly income. The cost of disability insurance for a self-employed individual is based on your income, so people with higher incomes will have to pay higher premiums.

The calculation of premium amounts also takes into account age and health. When compared to someone who is older or has health issues, someone who is relatively young and healthy will probably have a lower premium. Although it is possible to obtain disability insurance even if you have a preexisting condition, the insurance provider may include a clause in your policy that prevents them from paying out if your disability is the result of your preexisting condition.

The elimination period is the last factor in determining the total cost of self-employed disability insurance. When you become disabled, you will have to wait until the elimination period ends before you start collecting benefits. There may be an elimination period of 90 days in some policies before benefits kick in.

Best Disability Insurance for Self-employed 

#1. Northwestern Mutual

Northwestern Mutual is an industry leader in providing excellent service to policyholders. You can tailor your insurance plan to your specific needs, and that includes coverage for your spouse if they do not work outside the home. There is also coverage just for people who work for themselves in specialized fields, like the medical field. 

Start by claiming by calling Northwestern Mutual or filling out a form on the company’s website. You can expect to get your claim kit in the mail within two to three business days or via email within 24 hours. You may receive a request for more information or paperwork after submitting your claim packet.

Obtaining a disability insurance quote online is currently not an option. To get more information about the company’s insurance plans, you can contact a local agent through the website. After talking to an agent, your policy’s “disability” definition, waiting period, income percentage, and riders will be customized.  

#2. Guardian

Another long-standing insurer is Guardian, founded in 1860. It provides short- and long-term disability insurance for self-employed individuals. Employees covered by their employer-sponsored policies are the main target market for Guardian’s disability insurance. However, the provider does have policy options for independent contractors and business owners with only a few employees.

You can get a quick online quote from Guardian that includes the cost of optional riders like residual disability and cost of living adjustments. The flexibility of Guardian’s disability plans sets it apart from rival providers. Supplemental “riders” can be added to your disability policy to better meet your needs.

#3. Mutual of Omaha

Mutual of Omaha has more comprehensive built-in benefits for self-employed individuals seeking short-term disability insurance. Unlike some other companies, Mutual of Omaha gives policyholders who have been self-employed for two or more years a 15% discount, and their accident and illness coverage is more adaptable.

The minimum weekly work requirement is 30 hours, and applicants must be between the ages of 18 and 61. Mutual of Omaha offers both short-term and long-term disability insurance for individuals, though not all policy features are available in every state.

Although you can get a ballpark quote online, you will need to speak with an agent to finalize your application. You might be able to get up to $20,000 a month in benefits and skip the long wait times for short-term problems.

#4. MassMutual 

For the best long-term disability coverage, MassMutual is the clear choice. There are not many businesses that can offer the same level of security in terms of both longevity and financial stability. When it comes to long-term disability insurance, MassMutual gives you several choices. As riders, you may be able to add things like automatic benefit increases, catastrophic disability, and the inability to be insured in the future, but this depends on where you live.

Self-employed people can get up to 65% of their lost income, which sets this company apart from others in the same field. The first thing you can do is call MassMutual. They will send you a claims packet immediately. Send the package off via electronic mail, regular mail, or fax. 

#5. Breeze

Breeze offers both short-term and long-term disability insurance to companies, partners, and independent contractors. This company has one of the best apps out there if you know exactly what you are looking for and prefer to do all of your shopping online.

Like many people who work as freelancers or gig workers, Breeze does all of their work online. Their policies, including their quote search tool and the riders and additional benefits they offer, are tailored to freelancers and gig workers, and they do not even involve a salesperson. 

You can apply for Breeze quickly and easily online, and there are a variety of waiting periods from which to choose before your benefits begin. Policyholders can get their benefits much more quickly than with other types of insurance, typically within 30 days to a year.

Online quotes make it simple to see what your potential disability insurance policy might cover and whether or not a medical exam is required to enroll. Breeze uses computerized underwriting, which could help expedite the approval process for some borrowers. If you have any issues with Breeze after launching the app, you can call their support team and speak with a live person.

#6. Assurity

Assurity is the only listed provider that has achieved Certified B Corporation status, so if you are a self-employed worker who cares about issues of social justice, environmental protection, and corporate impact, you may want to give them serious consideration. For this reason, the business does not just keep its disability insurance promise; it also works toward social and environmental goals. 

Personally, Assurity provides short-term disability insurance, though you might not be able to use all of its features in all states. Just by selecting your age, gender, and occupation from a long list, you can quickly and easily obtain a quote online.

The quote tool also lets you see the price of optional benefits like an own-occupation disability definition, rising benefit amounts with age, guaranteed insurability, and a residual disability payout.

Short-Term Disability Insurance for Self-Employed 

A self-employed person’s healthcare requirements, eligibility, and budget all play a role in determining the best insurance plan for that person. If you have a disability or other preexisting medical condition, you may qualify for disability insurance that provides the specific services you require. It is important to remember that income requirements for participation in government-sponsored health plans are common. 

Understanding the distinction between short-term and long-term disability coverage is crucial.

In the event of a temporary disability, short-term disability insurance can help cover medical expenses. Short-term plans typically provide benefits for a period of a few weeks up to a year.

Injuries sustained in accidents or surgical procedures are examples of the kinds of situations that would qualify for short-term disability benefits. Sometimes expecting mothers will use their short-term disability policies to help them get some rest before or after giving birth. This policy term could last as long as two years. Depending on the policy, the average policyholder’s protection lasts between six months and a year.

People who can not work for a short time because of an illness or injury can get short-term disability insurance. It replaces a smaller part of your income before you got sick or hurt, usually between 40% and 60%. Long-term disability insurance pays out for a long time, but short-term insurance only pays out for a few months to two years at most.

Many companies cover their employees for short-term disabilities at no cost to them. If you are worried about your financial security, you might want to look into alternatives to buying a short-term disability policy on your own. Short-term insurance policies may not be worth the premiums paid by those who do not need coverage for an extended period.

Long-Term Disability Insurance for Self-Employed

Disability payments under a long-term policy typically extend for two years or more. It is possible that the payments will continue until the policyholder retires.

Cancer, stroke, and arthritis are just some of the serious conditions that long-term disability insurance will pay for. In addition to physical illnesses, mental health conditions that prevent an individual from working may also be covered. This type of policy may last several years or until your disability ends.

Those who are disabled and unable to work for a significant amount of time may be eligible for benefits through long-term disability insurance. It is possible that this time frame will span years, or even the rest of your life.

You may be subject to a cap on the length of time that you receive benefits from long-term disability insurance. Some policies, for instance, may pay benefits for ten years, while others may do so only up until a certain age.

It is common for long-term disability insurance to pay out between 60% and 80% of your regular salary. Long-term insurance is more expensive per month but pays off significantly in the long run. 

What Is the Difference Between Short-Term and Long-Term Disability?

The elimination period (or waiting period) for long-term disability insurance can range from weeks to months, and the length of time you receive benefits can vary from years to retirement. The waiting period for short-term disability insurance is typically between one and two weeks, and the duration of benefits is typically between one and two years.

Although long-term disability insurance that provides benefits until retirement may seem like the best option, a shorter-term policy may be more practical. Usually, you may have to pay more for insurance if you have shorter waiting periods and your benefits last longer.

Is Disability Insurance Worth It for the Self-Employed?

Insurance for self-employed people that covers disability may help protect your income if you get sick or hurt and can not work. The financial security of you and your loved ones can be guaranteed by purchasing disability insurance. 

What Are the Cons of Disability Insurance?

Some insurance providers require a medical exam before you can purchase a policy. This test could affect your ability to get insurance. Most disability insurance plans cost between 1% and 4% of a person’s income, which some people can not afford. 

A waiting or elimination period is a set amount of time between when your disability starts and when you start getting benefits from your disability insurance. Different types of policies have different waiting periods. During these times, you will not get any benefits.

Is Disability Insurance Tax Deductible for Self-Employed?

It is possible, yes. Business owners who purchase disability insurance for themselves or their employees can often write off the cost of the policy as an ordinary and necessary business expense. Talk to a tax professional if you need help figuring out your tax situation.

How Long Does EDD Take to Process Disability Claims?

After receiving a complete claim, it is usually processed within 14 days. Checking the progression of your DI claim is as simple as logging into your account. You should receive your payment within two weeks if you file your claim via the Internet or the mail. 

What Are the Types of Disability Insurance?

  • Long-term disability insurance
  • Short-term disability insurance
  • Social Security disability insurance
  • State disability insurance

What Is Disability Elective Coverage?

Since sole proprietors, partners, and independent contractors make up the bulk of California’s business community, DIEC is essential for safeguarding their interests. Self-employed people and business owners who qualify and become disabled also have access to this safety net. 

Disability Insurance (DI) benefits are available to qualified California self-employed business owners through the state’s Disability Insurance Elective Coverage (DIEC) program in the event of a loss of income due to sickness, injury, or pregnancy. To help cover the costs of caring for a family member who is seriously ill, the federal government offers paid family leave (PFL) benefits to qualifying self-employed business owners. 


Note that disability insurance helps you replace lost income while you are unable to work. Thus, most policies will not give you money when you reach retirement age. Furthermore, should you become disabled, you will not receive payment for any medical or long-term care expenses from your disability insurance policy.

  1. Best Small Business Health Insurance Providers ( 2023 )
  2. BASIC LIFE INSURANCE: What Is It & How Does It Work? 
  4. What Is an Insurance Attorney & What Do They Do?
  5. LONG TERM CARE INSURANCE: All You Need to Know


Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like