Here at TermLife2Go, we’ll often get calls from self employed individuals looking to purchase a traditional term life insurance or permanent life insurance on themselves to protect their loved ones or business partners in the event that they were to pass away prematurely.
…it make sense to purchase life insurance for both of these reasons, many folks fail to recognized that the need behind purchasing one of these “types” of insurance policies is only half met if they are not “accompanied” by a long-term disability insurance policy as well.
People generally purchase a life insurance policy so that if they die, their loved ones or business partners would not suffer “financially” as a result of their premature death. But what happens if this same person contracts some type of disease or suffers from some type of medical emergency or injury and doesn’t die?
What happens if…
This same person recovers from their “condition” but is no longer able to perform all of the same responsibilities and duties as they were before they became sick or injured?
In cases like these…
Many of the same negative consequences that would occur had the individual died without a life insurance policy can occur if they are no longer able to work in their “current” field of expertise; only this time, they may have many added medical expenses that now need to be considered as well.
And that’s the tough part…
Because most of us can “conceptually” understand that someday many, many years from now, we’re all going to die. But it’s an entirely different concept to consider that “someday” we might develop a medical condition that could prevent you from being able to work; and honestly, who really believes that they are going to suffer from some type of accident that could permanently disable them for life?
But let’s face it…
In this world, bad things can happen. So even if you don’t smoke two packs of cigarettes a day, have a passion for skydiving and spread butter on your bacon in the morning, you could still slip a vertebrae, get hit by a drunk driver, or find out that you’re great, great uncle had terrible genetic genes!
You just never know!
This is why in addition to helping all of our clients make sure that they have a proper life insurance policy in place, we also like to take a look at what a long term life insurance policy might cost and see if it makes any sense for you and your family.
The good news is that…
We work with many of the the best disability insurance companies based on how flexible they’re policies are and the occupational and health niches they fill. Plus, we often have the ability to tailor a their policies to meet your needs or the needs of your small business.
We can even craft multi-life discount plans for you to help you get the best disability insurance quotes available.
Individual Disability Insurance for Self Employed
At TermLife2Go, we do our research and help you shop around to find the best companies and the best policies. That said, it’s important to realize that there’s never going to be a “one-size-fits-all” company or policy out there.
Each company is going to have its own unique niches that may favor one occupation over another, or one health issue over another, etc.
But don’t fret….
Our job is to know each company and its niches so that we can align you with the disability insurance company that will best meet your needs. All you really need to do if you want an accurate disability insurance quote, is to just give us a call or send us an email and we’ll get on it for you!
And in our experience…
The best way to do this right is first “educate” you on exactly what a long term disability insurance policy is and how it can help you and your family provide a secure financial future regardless of what health issues may arise.
There are three types of disability insurance you should consider if you are self employed. The most important type would be long term disability insurance. You may also benefit from short term disability insurance. Finally, if you cannot get coverage because you cannot qualify or your occupation is too hazardous, you may want to consider an accident only short term disability insurance policy. Let’s start by looking at the accident only policy.
Accident-Only Short Term Disability Insurance if your Self Employed
What is an accident-only short term disability insurance policy?
Accident Disability Insurance covers you only for an accidental injury, not in the case of illness. If you are not concerned with covering illness but believe you have a higher risk of injury due to an accident, this policy may be all you need.
Short Term Disability Insurance if your Self Employed
What is a short term disability insurance policy?
Short term disability insurance covers you for a shorter benefit period of 3, 6, 12 18 or 24 months. The monthly benefit maximum is typically lower than with long term coverage and the elimination period is short, with the quickest elimination period being 0 days for an accident and 7 days for a sickness.
Short term disability insurance is meant to provide a buffer for a short period of time so you can avoid a run on your rainy day fund, invading your savings, or using credit cards to get by. Ideally, you would want to also have long term disability insurance if you are self employed in case you disability lasts more than 90 days.
Long Term Disability Insurance if your Self Employed
What is a long term disability insurance policy?
Our definition of long term disability insurance (LTD) is an insurance policy that replaces your income by paying you a tax free income benefit if you are totally disabled or partially disabled that lasts for an extended period of time, typically two or more years.
The key here is that it will replace your income. How exactly does that work?
The disability insurance provider will use your income to determine the maximum amount of benefit you can qualify for within the policy you’re considering. This is where, you’ll find that you can “customize” your policy to meet your needs.
That said however…
There are five main definitions you should be aware of.
- Income Benefit
- Elimination Period
- Benefit Period
- Own Occupation Definition of Total Disability
- Any Occupation of Total Disability
Your policy can be adjusted to accommodate your budget, your needs, your goals and objectives. You can raise or lower certain benefits to increase coverage and raise your premiums, or decrease coverage and decrease your disability insurance rates.
Is one of the reasons why so many people can become “confused” when researching which “kind” of disability insurance policy is right for them. It’s also why so few “life insurance” agents will discuss disability insurance policies with their clients because you really need to know your “stuff” if you want to “present” it properly!
The income benefit
The Income benefit is how much cash you receive monthly from the disability insurance company. The insurer will use a formula to determine the benefit amount you can qualify for. If you are totally disabled you will receive your income benefit, but not until after the elimination period.
The elimination period
Before your policy is issued you make the decision on how long or short of an elimination period you need. The longer out the period extends, the lower your premiums, but the longer before you get paid (or receive a benefit from your disability insurance policy).
You can choose a short period of 30 days, 90, 180, 365, all the way up to 730 days. Once the elimination period ends you can start on your benefit period.
The benefit period.
Your benefit period determines how long you will receive your cash if you remain totally disabled. Once again, the longer your benefit period, the longer you get paid, but the higher your disability insurance premiums will be.
Benefit periods can be as short as 1 year, 2 , 5, 10 years or to age 65 or to age 67, with some companies offering conditional benefit periods up to age 75.
Own Occupation definition
All benefit payments will be dependent on you meeting the definition of total disability in your policy. Ideally, you want an OWN OCCUPATION definition of total disability. The own occupation definition for total disability requires that you are unable to perform the substantial and material duties of your regular occupation. Why does this definition matter? Because a true own occupation policy still considers you totally disabled if you are gainfully employed in another occupation so long as, solely due to injury or sickness, you are not able to work in your occupation.
What does that mean?
It means you are still disabled, and getting your income benefit, even though you are gainfully employed in another occupation. Now compare that definition to any occupation.
ANY OCCUPATION definition
With ANY OCCUPATION definition of total disability requires that you are unable to perform the substantial and material duties of any gainful occupation. Do you see what they did here? That is a vague definition and applies to pretty much any work out there.
So, if you just spent 8 years busting your hump to become a brain surgeon and you damage your dominant hand in the car door, under any occupation definition you would not receive benefits if you became a consultant or some other job that was related to your field.
Some other terms you need to be aware of are:
- Guaranteed Renewable
When you take out a private long term disability insurance policy the last thing you want to be worried about is the provider raising premiums on you. So, the remedy is to get a policy that is noncancelable.
Noncancelable means the premiums remain fixed for the life of the policy. The alternative is guaranteed renewable, which provides that the carrier reserves the right to raise premiums on a specific class down the road. You are guaranteed the right to renew your coverage until the policy end date, but the insurer reserves the right to raise your disability income insurance rates.
Lots of “rights”, I know. It is a contract, after all.
Needless to say, you’re probably not going to see an insurance commercial featuring a “Lizard” telling you how he will be able to save you 15% or more on your disability insurance in less than 15 minutes!
And that’s because…
Finding the “right” disability insurance policy for you and your family is a “bit” more difficult than buying a home or auto insurance policy. But that doesn’t mean that the process has to be a horrible experience.
It just means that…
If you’re truly serious about protecting YOURSELF and your family, invest 20 minutes or so and give us a call. We work with many of the top disability insurance companies and promise to offer you a “stress” free experience where you can ask any questions that you like and if and when you’re ready, we’ll help you complete the application and be there throughout the entire underwriting process until a decision is made.
So, what are you waiting for? Give us a call today and see what we can do for you!
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