It’s easy to assume that your primary insurance needs as a freelancer will be some type of liability insurance to cover you in the event you run into an issue with a client, but that shouldn’t be your only concern.
In all honesty, as a freelancer, you are 100% the business, and without you, nothing happens; therefore you should first look at what personal types of insurance you will need, then consider the ones for you may need for Freelance work.
In this post today I will help you navigate the different types of insurance you will need as a freelancer for your personal and business life, why these types of coverage are essential, and how to get them easy and fast.
Why Freelancers Need Insurance
Before I started blogging, I was selling life insurance online and over the phone full time and working about 16 hours a day. I was an independent agent, so that meant I had to be everything, do everything, and of course, pay for everything.
When you are self-employed, if you go down, the business goes down, and you are always one situation away from total financial disaster.
According to Upwork, over 57 Million of us are Freelancers and will choose our freelance lifestyle over an increase in our income. But for your lifestyle to be maintained, you are going to need insurance. Mainly because if you are ever in a situation where you can’t work, or you get into a legal battle, it can ruin your dream and lifestyle.
The best and only way to maximize you & your family’s protection is going to be to get:
- Disability Insurance
- Dental Coverage – Trust me!
- Life Insurance
- Liability Insurance
- Health Insurance
The above types of insurance are going to be the foundation of you being able to both grow and maintain a successful freelance career, and I talk more about why below.
Insuring Your Paycheck
Most people have a poor understanding of what disability insurance is and how it works, and because of that, I refer to it as Paycheck Insurance.
Now that you have read the words paycheck insurance, it probably makes way more sense as to what a disability insurance policy actually does.
In other words, Disability Insurance was created to insure a percentage of your paycheck if you become disabled.
How It Works – The Cliffs Notes
In a quick review, on average, a disability insurance policy will cover upwards of 65% of your monthly take-home pay for a specific length of time.
There are two types you will hear about, short term, less than 60 days of coverage or long term, longer than 90 days of coverage. It’s best to go with a long term disability policy because you want something that can cover you for at least a year or two if you become disabled.
There is also an elimination period, this is the amount of time you must be disabled before the benefits will kick in. (30,60,90 days).
Once you reach the elimination period, your benefits kick in, and you can use the money to cover anything like:
- Daily living expenses
- Auto Loan
- You name it!
You Have A 50/50 Chance
Now, you are probably thinking… “I work from home, so this doesn’t apply to me,” but you would be dead wrong.
Almost all disabilities, around 90% are caused by illness, not accidents, and over 90% of disabling accidents and illnesses happen outside the workplace.
Those stats mean that your profession doesn’t matter when it comes to becoming disabled, it probably comes down to just luck more than anything.
In the freelance economy, about 38% of people between the ages of 18 – 44 are freelancing.
If you are part of these age groups, like me, you have a 50% chance of becoming disabled for more than 90 days by the age of 65.
If you don’t have a disability insurance policy in place to cover your paycheck, then you are risking everything.
Who You Leave Behind
I decided to become self-employed because like almost everyone that does, I wanted a better lifestyle for myself and my family.
But what happens to this new lifestyle and your family if you were to pass away?
There is no better way to put it, you need to have some type of life insurance, and if you don’t have it, you need to get it fast.
How It Works – The Cliffs Notes
Life insurance is pretty simple, first, as a freelancer, I would only recommend looking into a term policy because it’s going to be the most affordable option.
These policies work like this, you pay a specific amount of money, for a set amount of time, for a certain amount of coverage For example, you would pay $30/month for 30 years for $500,000 in coverage. If you were to pass away before the 30 years is up, the policy pays out 100% of the coverage amount.
If you live the full 30 years or get close to the term ending, you will have to decide to either renew the policy, let it lapse, or convert the policy. Term life insurance was created with the idea that you would only need a specific amount of financial protection for a set period.
If you get a 20-year term and you currently have kids, they would be at least 20 years old at the end of the policy. You would have also paid 20 years on your mortgage and have overall less debt and need less insurance.
A life insurance payout can be used to pay for anything to you should definitely pick someone responsible as your beneficiary.
Don’t Shop For Yourself
One of the biggest mistakes people do, including some of my close friends, is that they go into the mindset that they are shopping for life insurance for themselves.
That is absolutely the wrong way to do it when you shop for life insurance, you have to think about who you are leaving behind. This policy is for your wife, husband, kids, cousin, sibling, mother, or father, basically anyone but for yourself.
They are going to be the ones left with the financial and emotional burden of living without you, so it’s best to shop for them.
If you don’t have life insurance, I can’t stress it enough, you need to get covered now.
An Apple A Day
Now, I know you guys know the simple saying “An apple a day keeps the dentist away.” While that is true if you don’t have some type of dental coverage, you are likely not taking good care of your teeth. You are probably wondering, why are we bringing up dental coverage, well the reason is that your dental health will affect your overall health.
A recent study just proved that there is a direct link between poor dental health and Alzheimer’s disease. According to The Mayo Clinic, there is a huge link between oral health and your general health. Researchers have discovered that poor dental health is linked directly with overall systemic conditions.
Basically, a healthy mouth helps you maintain a healthy body, and oral bacteria and inflammation can lead to:
- Cardiovascular disease
- Pregnancy and birth complications
- Alzheimer’s disease
- Rheumatoid Arthritis
- Certain Cancers
- Sjorgren’s Syndrome
As a freelancer, there is no way you want to have to deal with anything on the above list, and you shouldn’t let your teeth be the cause of it.
How It Works – The Cliffs Notes
There are two types of dental coverage out there, dental insurance and dental discount plans. Both of these plans will cover you for dental care, but they work differently.
Dental Insurance usually has a waiting period for specific procedures that you can have as well as annual maximums for dental procedures. So if you need a root canal or dental surgery, you usually need to wait a year or two before dental insurance covers you. However, you can choose your own dentist.
Dental Discount Plans are my favorite because they have no waiting periods and no annual maximums. You can also get discounts for your procedures from day one. The only downside is that you have to choose in-network dentists and your favorite place might not be part of their network.
The Truth About Your Teeth
Bad oral health isn’t only an “Internal” issue, as a freelancer, you are going to be face to face with people, and they are going to look at your teeth.
People will 100% judge you as a person and a professional if you have bad breath and if you don’t take good care of your teeth. This could be the difference between you landing a new gig or it going to someone else. It is essential that you get those bi-annual dental check-ups and also that you get a deep cleaning done once a year at the least.
There is a documentary that you can check out here with the same name as this sub-topic, and it will amaze you how people look at you and how fast your life can change if you have poor dental health.
As a freelancer, you can’t afford to have bad teeth or poor oral health.
It’s Not Your Fault… Or Is it?
Last, but certainly not least, you are going to need to get some liability insurance.
As a small business owner, self-employed person, or freelancer, it’s probably best to start with what is known as E&O insurance, short for Errors and Omissions Insurance.
Just as it sounds, this coverage protects you from any errors or ommissions you are being blamed for if a client takes you to court.
As a licensed insurance agent, most insurance companies won’t allow you even to sell their product unless you have E&O coverage.
How It Works – The Cliffs Notes
Let’s say you are a personal finance blogger, and you write an article about how to invest in the stock market.
Let’s say one of your readers took your advice and lost their shirt in the stock market, well, they need someone to blame, and it will probably be you. This is where E&O comes in, it will protect you up to $1,000,000 or $2,000,000 depending on the policy you choose for things like attorney costs, court costs, and even personal injury situations.
As a freelancer, an E&O policy should be your standard base policy to start with. As you become more specialized or start changing the advice you give, or as your business grows, you should increase your coverage.
Don’t Be Evil
There was a massive scandal behind Google, removing the words “don’t be evil” from its code of conduct. But this is an important thing to remember, your customers, clients, and readers are people.
If you treat them as such, and not “be evil,” you might not ever need to use your E&O coverage. But keep in mind, things happen, what would happen if your site was hacked and you lost your customer data? That type of thing could cause a huge lawsuit, and you don’t want to be in a position of no coverage at that point.
There are over 15 Million civil cases per year, and any of us could become part of that at any time. E&O insurance is one of the fastest and easiest ways to start protecting yourself while you figure out how your business will eventually work.
Your Health is Your Wealth
With the Affordable Care Act, often called Obamacare, it is easy to become confused about health insurance. For some people, talking about health insurance has become almost similar to talking about religion or politics.
As a freelancer, there are a ton of health insurance options that you can look into, but it is still a complicated space. Premiums can be expensive, and coverage will have some type of gap in it.
I pay around $300 per month for my own individual policy, and I don’t think the price will be going any lower, any time soon. You can use the health insurance exchange and which can help with giving you some sort of stipend based on your income.
And if your spouse works a typical 9 to 5, you should consider being added to their health insurance policy.
Look, most of us who go into the world of freelance are doing it for a better life and better opportunity for our family.
However, it is one of the most challenging types of careers, and it isn’t going to be easy. But the only way to do it right is to protect yourself, your business, and your family from financial ruin. Especially since you can’t control any of the above situations.
If you don’t have any of this coverage, then you need to begin doing research and determine where your vulnerable. You have already decided to change your future, you might as well protect it
This is a guest post by Sa El is the Co-Founder of Simply Insurance. He has over 10 years experience in the life and health insurance industry.