Disability insurance at a glance

Jul 17, 2019

What is disability insurance?

Disability insurance protects you from losing all your income if you become incapacitated after an accident or illness. In the event that you become unable to earn an income, benefits will kick in and replace a portion of your previous monthly income.

Do I really need disability insurance?

Many freelancers prefer not to invest in additional insurance in order to protect their monthly take home pay. But freelancers also don’t have the luxury of paid time off or sick leave. So, if your income is needed to pay for housing, food, school, medical bills or other expenses, and your savings will tap out after a month or two, chances are you need disability insurance.

When should I purchase disability insurance?

Just like life insurance, disability insurance costs less the younger and healthier you are when you purchase your policy. So, if disability insurance is something in which you know you’ll be investing, now is the time to go for it.

How is “disabled” defined in these policies?

Definitions vary by plan and profession, but a good rule of thumb for our Guardian-managed policies is that you are disabled if you're unable to perform the duties of your regular occupation. In fact, that is one of the greatest benefits of our freelancers’ policies: there are no penalties for your chosen profession.

How much coverage do I need?

Every household is different, but a good guideline is to seek a policy that will replace about 50% of your average monthly income (this may be tough to calculate for freelancers, so you’ll want to examine the past six months’ income to get an accurate picture of income needs).

What will my benefits be?

Like coverage, benefits will be calculated as a percentage of your current taxable income (the pay you brought home after allowable deductions like business expenses). In order to calculate your benefits, Guardian will examine several years of tax returns to determine an average annual income level.

When will my benefits kick in?

Any disability policy will have an elimination (waiting) period before you can begin collecting benefits. The elimination period begins on the first day of your illness or injury. Freelancers Union offers policies with both 30- and 90-day waiting periods to meet your needs. The 90-day policies will carry lower premiums than those of the 30-day policies.

How much should I expect to pay?

Rates vary, but will be determined by a combination of factors, including:

  • Your age
  • Your benefit level
  • Your current income
  • Your elimination (waiting) period

Even with these varying factors, your monthly out-of-pocket premiums will likely cost you between $10 and $30. Get more information on our disability insurance coverage and rates here.