Disability Insurance for
Self-Employed Individuals
When you're self-employed, there's no HR department, no employer-sponsored disability plan, and no safety net. If you can't work, the business stops - and so does the income. Here's how to protect yourself.
Call 877-PATRIOTTwo Types of Coverage Self-Employed People Need
Personal Income Replacement (DI)
Replaces your personal income if you become disabled. Pays a monthly benefit directly to you, not the business. This is the foundation of income protection for any self-employed person.
- ✓60-70% of net business income
- ✓Own-occupation definition (critical for business owners)
- ✓Benefits paid to you personally
- ✓Tax-free if you pay the premium
- ✓Portable - follows you regardless of business changes
Business Overhead Expense (BOE)
Pays your business's fixed overhead expenses while you're disabled - keeping the business alive until you recover or can sell it. Separate from personal income replacement.
- ✓Covers rent, utilities, employee salaries
- ✓Loan payments and equipment leases
- ✓Benefit period typically 12-24 months
- ✓Premiums are tax-deductible as business expense
- ✓Allows business to continue or be sold as a going concern
Self-Employed Disability Questions
Can self-employed people get disability insurance?
Yes. Self-employed individuals can purchase individual disability insurance policies directly from insurance carriers. The underwriting process verifies your income through tax returns (typically the last 2 years of Schedule C or business tax returns). The benefit amount is based on your documented net income. Self-employed individuals often need to document their income more carefully than W-2 employees.
How is disability insurance income calculated for self-employed people?
For self-employed individuals, disability insurance carriers typically base the benefit amount on your net business income (after business expenses) as reported on your tax returns. If your business income fluctuates significantly, carriers may average the last 2-3 years. Some carriers also consider business overhead expenses separately through a Business Overhead Expense (BOE) policy.
What is Business Overhead Expense (BOE) disability insurance?
Business Overhead Expense (BOE) disability insurance pays your business's fixed overhead expenses (rent, utilities, employee salaries, loan payments) if you become disabled and can't work. It's designed for business owners whose business would continue to incur expenses even if they couldn't work. BOE is separate from personal income replacement disability insurance - most business owners need both.
Protect Your Business and Your Income
We specialize in disability insurance for self-employed individuals and business owners. Call us for a free income protection analysis.