Self-employed disability insurance protects your income in case you are not able to work.
Self employed workers have so many benefits but they don’t have luxury to miss the work as employees get benefitted from their companies. In case one gets illness, injury, or accident for a long period of time and can’t earn income the disability insurance will help to pay the bills.
If someone is self employed this means that he don’t have the income if he can’t work. The disability insurance is for a safety package that can protect your income in case something bad happens.
Roughly, there are two types of disability insurance you can look into: One is short term and another is long term. As the name says, short term will start paying a part of your salary for less time like three to six months. The long term will be for a long period of time, like years.
For self employed the “Long term disability insurance” is commonly offered as the short term is commonly offered for a salaried person but it can be available for a self employed too. However, long term insurance is often considered as better as it will not give a big burden on you in a quick time.
Typically, the Short-term disability plans replace 40% to 80% of your income. However, it is you who need to figure out the best for your situation and needs.
Reasons you need the disability insurance even you think you don’t
You are paying off debt – If you are paying out monthly installments, mostly for your credit cards, sudden loss of income will make it difficult to pay the bills on time.
You are the bread winner in your family – The disability insurance is not for you only but to your others who rely on you.
Want a tension free life – Disability insurance is crucial for self employed workers. Going for it will reduce any tress or burden to hold money in case something bad happens.
How the benefits are calculated?
The benefits are primarily based on your taxable earned income, which is your main income after business deductions (Like Rent, Equipments). The insurance company will review your historical tax returns and then the team will determine the benefit payout for you. If you are a self-employed and looking for self-employed disability insurance so you should visit Instant Disability which is helping thousands of professionals to get their suitable policy.
Is disability insurance tax-deductible for self-employed?
If you are a sole proprietor, you can’t deduct disability insurance premiums however the benefit money will be taxed.
LLC will be able to deduct disability insurance premium from your taxes.
S-corpswill be able to deduct the premiums from their taxes on shareholders or employees who own more than 2 percent of the business.
C-Corporation will be able to deduct premiums on employees that it pays the premium for.
Final Words – Having disability insurance can be the main difference between saving your business (or job) and get forced to close it once you are ill or injured for a long period of time. You need to understand your situation and choose the plan that suits you the most.