Disability Insurance
What disability insurance options are available for self-employed people?
Self-employed people have no employer-provided disability coverage and are not eligible for state disability programs in most states. Individual disability insurance is the primary option. Key features to look for: own-occupation definition, monthly benefit of 60–65% of net income, benefit period to age 65, and a 90-day elimination period (if you have 3 months of savings). Business overhead expense (BOE) insurance is a separate policy that covers your fixed business expenses (rent, utilities, employee salaries) if you become disabled and can't work.
Key Points
- Self-employed have no employer-provided disability coverage
- Not eligible for state disability programs in most states
- Individual disability insurance is the primary option
- Look for: own-occupation definition, 60–65% of net income, benefit period to age 65
- Business overhead expense (BOE) insurance covers fixed business expenses during disability
- Premiums for individually-owned policies are NOT tax-deductible (but benefits are tax-free)