Disability Insurance

Self-Employed? You Have No Safety Net. Disability Insurance Is It.

Employees have workers comp, employer disability plans, and sometimes state disability. Self-employed people have none of that. Here is how to protect your income.

🇺🇸 Patriot Plans Editorial Team·8 min read·May 5, 2026

When an employee becomes disabled, they have multiple safety nets: workers compensation, employer short-term and long-term disability plans, and sometimes state disability insurance. Self-employed people have none of these. If you cannot work, you have no income. Period. Disability insurance is the only solution.

The Self-Employed Disability Gap

Employees typically have access to employer-sponsored disability insurance that replaces 60% of their salary. Self-employed people have no employer to provide this benefit. Social Security Disability Insurance (SSDI) is available, but the average benefit is only $1,537/month and the approval process can take years.

How Self-Employed Disability Insurance Works

Individual disability insurance replaces 60-70% of your income if you become disabled. Benefits are typically tax-free (because you pay the premiums with after-tax dollars). The policy pays until you recover or reach age 65, depending on the benefit period you choose.

Documenting Income for Self-Employed

Insurance companies require proof of income to issue disability insurance. For self-employed people, this typically means 2 years of tax returns. If your income is variable, benefits are typically based on your average income over the past 2 years.

Business Overhead Expense Insurance

Business overhead expense (BOE) insurance is a separate policy that covers your business expenses (rent, utilities, employee salaries, equipment leases) if you become disabled. It ensures your business can continue operating while you recover.

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Frequently Asked Questions

Can I deduct disability insurance premiums as a business expense?

If you pay disability insurance premiums as a business expense, the premiums are deductible but the benefits are taxable. If you pay premiums personally (after-tax), the premiums are not deductible but the benefits are tax-free. Most advisors recommend paying personally for tax-free benefits.

How much disability insurance can I get as a self-employed person?

Most carriers will insure up to 60-70% of your net income (after business expenses). The maximum benefit is typically $10,000-$20,000/month, depending on the carrier.

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