Self-employed individuals who work from home typically don’t confer with others about purchasing disability insurance. Those who have researched this type of coverage usually find that policies are expensive. In addition, not all disability insurance agencies are willing to work with self-employed individuals. And many policies aren’t enough to replace regular income. Still, there are a few important items to know in order to get the coverage you need at a good price.
HOW MUCH INSURANCE IS NEEDED
The purpose of disability insurance is to replace regular income for a long period of time. Although disability policices for self-employed individuals rarely replace gross income, it can replace a considerable portion of it. To get a better idea of how much to aim for in a policy, consider your total expenses. It is best to find a policy that allows this amount of compensation. If there are licenses or other business expenses that must be paid to keep current in the event of a disability, it is best to add a Business Operating Expense (BOE) policy to the long term disability (LTD) coverage. BEO policies are limited, so it is important to speak with a Gunn Mowery agent to understand what they cover.
HOW MUCH COVERAGE COSTS
Disability coverage can be costly. In most cases, a good policy’s monthly premium is slightly more than 10-percent of gross monthly income. Keep in mind that smaller premiums mean less coverage. But there are ways to save money without skimping on coverage. First, considering buying for a set number of years instead of the full term between current and retirement age. Another way is to extend the benefit waiting period. Settling for a smaller payout is another option, too. The ideal option is to buy into a group policy. Individuals who belong to a professional organization should contact a Gunn Mowery representative to see if there are group policies offered. Our agents may also know of other resources available to some individuals.
HOW QUALIFICATION IS DETERMINED
Since a LTD policy replaces income, it is important to prove a consistent income. To do this, copies of tax returns from the past five years are often required. Insurance agents may also make a home visit to analyze a work area. Their goal is to ensure that individuals are truly earning a sustainable living. If agents suspect that work performed at home is part-time or irregular, there may be issues with qualification. Obtaining the proper licenses for the type of work chosen is very beneficial. For example, an accountant should have the proper license for practicing accounting and running a business. Keeping the working area properly seperated from the living area of the home is also helpful. Freelance workers and other independent workers who don’t have licenses face the biggest qualification challenge. Written contracts, proof of steady income and tax returns are the best tools for such invidiuals to prove qualification.
THE MOST IMPORTANT POLICY DETAILS
Be sure to ask Gunn Mowery if the policy replaces income from all types of work, or just from the current profession. Some policies are set up to encourage workers who lose the ability to do one task to remain responsible by performing a similar one. However, some policies pay disability benefits to a worker who can’t do their specific job anymore — even if they are qualified for a different line of work. This usually becomes an issue if the alternative job pays significantly less than the current position. If the disability policy pays more than an alternate form of work would, it is best to keep the policy. Most policies have a waiting period between 60 and 90 days. Some waiting periods restart if an isured individual attempts to work during that time. Be sure to understand the terms of the policy thoroughly. Contact your Gunn Mowery agent with any questions.
Do you have the right amount of short or long-term disability coverage? Call your Gunn Mowery representative today at (800) 840-1243 or e-mail us at firstname.lastname@example.org. Become our Facebook fan at