Disability Insurance for Self Employed

Running a business entity is an extremely challenging task. Many entrepreneurs who run small or medium scale business enterprises are often covered under insurance policies as they provide financial safety to them. Moreover, urgent and unexpected events of life never come with a warning. They just strike us at any time and any day. In such dire times, insurance covers can be very beneficial. For instance, if you are self employed then disability insurance can be availed due to various reasons that are as follows:

• Some serious illness and accidents leading to long term disability from work.
• Childbirth or pregnancy related cases that stopped your working.
• A member of your family who needs your care due to illness.
• You may wish to spend time with your newborn kids or old aged parents and so you need to be away from work.

For self employed people, disability insurance is an excellent option to ward off the tragic aftereffects of any accidents. A self employed worker needs insurance just like employees of various firms and organizations. While people working as employees have the option of employer insurance or paid sick leave, for self employed people purchasing disability insurance is the safest choice they can make. Let us discuss it in more detail.

Eligibility Criteria

There are certain criteria that must be satisfied by a person running business units on their own to gain the benefits of disability insurance. For instance, if the person is running the business from his home, then he should make it a point that he mentions this in the legal papers and also posts a sign or a mark on the entrance of the house. This is to validate the point that the person runs a home owned business and insurance agent can check out the reality. Besides this, you are expected to be very accurate and honest about your incomes and various legal papers concerning your business. Ensure that the data related to transactions and other bank procedures is correct. These things are essential, because while informing the insurance about your income, you need to demonstrate your sources of income.

Disability Insurance Options for Entrepreneurs
There are basically two types of insurance options for people who run their own businesses. To provide a financially secure future to the family and to the individual, in any case of accidents leading to disability or other major injuries, these options can be availed.

Long Term Disability Insurance
Long term Disability Insurance (LDI) provides you with the benefits of longer waiting periods and consequently higher benefits and returns. The waiting period lasts about 30 to 180 days and the benefit period is spread over a time period of 5 years. Through this insurance cover, you can get 70% of your pre-tax income. This insurance scheme is not supposed to be very beneficial in the long run and generally people make a choice for the short term insurance.

Short Term Disability Insurance
The short term disability insurance has a very small waiting period of 2 weeks and the benefit period lasts for about 13-26 weeks depending on the policies of the insurance firm. The short term disability (STD) pays of some percentage of your salary not because of terminal illness or long leave from but due to temporary leaves. Since the waiting period for STD is about 0 to 14 days, you can receive the benefits just after two weeks you fall ill or are disabled.

While searching for several types of disability insurance for self employed people, make sure you are very clear with the policies and terms of the insurer and you are aware of all the pros and cons of the policy. Do an extensive research before purchasing any of the disability insurance policies, as these policies can be a breather for you in times of financial crisis.