You’re crushing it. You’re really, really good at what you do: graphic design, writing, photography, development, event planning, video editing, or another amazing skill. And you’ve decided: it’s time to go freelance.
Going freelance is awesome. You can work when you want, where you want, in whatever clothes you want. You have a higher income potential and you can take advantage of more tax deductions.
There are a lot of things to get in order before you go freelance, one of which is getting long-term disability insurance.
Long-term disability insurance (LTD for short) is crucial coverage for anyone who’s working, even if you’re not working a traditional job or if you’re self-employed.
What, exactly, does LTD insurance cover? It’ll cover any illness or injury that keeps you out of work for more than a few months. LTD insurance replaces your income if you can no longer work due to a disability.
This is way more common than you might think–the average 20-year-old has a 25% chance of experiencing a long-term disability at some point before they retire.
And despite what you might think, 90% of long-term disabilities are caused by illnesses, not accidents. Common causes of long-term disabilities are musculoskeletal disorders, cancer, and mental disorders.
Here’s where it gets a little complicated for freelancers and the self-employed: most LTD insurers want to see at least two years of steady freelance work before they insure a freelancer.
That makes sense for the insurance company–they’re insuring your income, and if they don’t have a solid understanding of your income, they can’t insure you.
That’s why you should get LTD insurance before you leave your job to start freelancing. Once you have LTD, you’re locked in. If you buy a "non-cancelable/guaranteed renewable" policy (which you should), your insurer cannot cancel your policy, even if you leave your job, get fired, or go freelance. They can’t reduce the benefit amount, either–so even if you have a fluctuating income or a lower income, your LTD policy will still be set at the income you received at your full-time job.
If, after two years, you’re making more money freelancing and want to increase the benefit on your LTD policy, you can get more coverage from your insurer at an increased rate.
Ready to get a quote? Jump on over to our long-term disability quoting engine.
Still not convinced that you need LTD insurance? Read more about why a long-term disability insurance policy is worth it.