Work disability insurance is a financial safety net. It provides income if you become unable to work due to a serious illness or injury.
What is Work disability insurance?
Work disability insurance is a type of coverage that pays you a portion of your income if you become disabled and cannot perform your job. It's designed to replace lost earnings during a period when you cannot work due to a covered medical condition.
Why is this important?
For freelancers, your ability to work is your only income source. Unlike traditional employees, you have no sick pay or employer-sponsored disability plan. This insurance is your primary defense against financial ruin from a long-term health issue.
How does it work?
You pay a monthly premium to an insurer. If a covered disability prevents you from working, you file a claim. After a waiting period, the policy pays a monthly benefit, typically 50-70% of your pre-disability income, for a defined period or until recovery.
Pros and cons
Key advantages include income security and peace of mind. The main drawbacks are the cost of premiums and policy complexities like exclusions and strict definitions of 'disability' that you must understand before purchasing.
Conclusion
Work disability insurance is a foundational element of a freelancer's financial plan. It protects your most valuable asset: your ability to earn. Evaluating and securing appropriate coverage should be a high priority for anyone without employer benefits.
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