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Working for yourself or running your own business usually comes with a multitude of advantages and advantages – flexible working hours, the joy of being your own boss, the ability to explore and realize your creative passions and more. In many cases, remote working can also be an option, allowing entrepreneurs to choose when and where they work. What is lacking in this setup, however, are important protections and financial security typically offered by traditional employers. Instead, freelancers and contract workers must take on the responsibilities of purchasing their own health insurance plans, building and managing their retirement and work funds without paid time off or sick leave.
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In today’s tight labor market, many traditional employees are wait and receive, higher wages and better benefits. But what happens when you are the employee and the employer? Whether you’re a freelance writer with 10 different gigs, a freelancer just starting out with your first business, or an established entrepreneur running a small business, you likely won’t have access to many benefits that other workers may take for granted. One of the most important benefits that you are missing? Disability protection.
People, especially young people, like to think of themselves as invincible. Although we know this is not the case, healthy people tend to underestimate their chances of suffering from a severe disability. While life, auto and home insurance are often bought without giving it much thought – even if it is never used – it can be more difficult to understand how vital disability coverage is, and many people are hesitant to purchase it. In fact, provided by the employer or not, only about one in three workers have adequate protection in the event of disability.
The chances that you will need this help may surprise you. The Social Security Administration (SSA) provides that one in four 20-year-olds will be disabled before the age of 67. And if you sustain an injury or illness that puts you out of work, you may have few resources available to help protect your larger assets, especially if you are trying to run your own business or support yourself in your own business. through uncertain and sometimes unstable concerts.
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According to the Federal Reserve Board 2017 survey When it comes to household economics, more than a fifth of Americans can’t pay all of their monthly bills in full, and almost half don’t have enough money set aside to cover a simple household expense. emergency $ 400. This means that in the event of serious illness or injury, an independent adult could easily slide into poverty, have their home foreclosed, or take other drastic measures. Beyond that, a small business CEO who can’t come to work can spell the end of the business.
While some people choose to purchase their own Long Term Disability Insurance (LTD) plan to cover against these scenarios, it can represent an additional cost that non-traditional workers cannot afford. On average, LTD plans cost between 1% and 3% of an individual’s annual salary. In addition, older people, smokers and people in “risky” occupations are generally offered more expensive policies.
The good news is that the federal government provides a safety net for all entrepreneurs and freelancers who stay on top of their FICA taxes: the Social Security Disability Insurance (SSDI) program. SSDI is an income replacement insurance for former disabled workers supervised by the SSA. It is versatile and accessible to anyone who meets the requirements, regardless of the number of companies in which they are employed. Small businesses can take advantage of programs like Extended benefits, which is free for all employers without private disability coverage, to provide this valuable resource for their employees to use in the event of disability.
Typically, to be covered by SSDI, workers must have paid FICA taxes or self-employment taxes for five of the past 10 years. Work history, education, age, and mental or physical conditions can all have an impact on the SSDI process and its outcome, but the bottom line is that this benefit is available and already waiting for you, regardless of your resources. financial or if you have access to traditional benefits.
Related: Self-employed people will soon be able to purchase short-term disability insurance through this startup
No one wants to think about something bad that happens to them, such as a health emergency or a disability, or a threat to their financial and physical property. When the unthinkable happens, entrepreneurs who choose to access disability protection may discover a silver lining while going through a very difficult time. Are you an entrepreneur prepared for the unthinkable?