When you work as a freelancer in any industry, your income is a bit unpredictable. Even if you have regular clients, there will be months when you earn more and months when you earn less. In a way, having multiple income streams is more stable than having income from a single job, since if you lose one client, you won't be left completely without pay. However, you do have to consider what will happen if something unfortunate happens to you and you're left unable to work at all for a period. That's where short-term disability insurance comes in handy.
What could happen?
Freelancers in non-physical work sometimes assume nothing could happen to them that would keep them from working. For example, if you are a freelance writer, you could keep doing your job with a broken leg or strep throat. However, even in industries where the work is sedentary, there is a potential for an injury that keeps you from working. What if you were to suffer a concussion and be left unable to look at a computer screen for two weeks? Accidents can happen to anyone, so it's important to be protected regardless of your injury.
What does short-term disability insurance protect against?
Basically, when you are a freelancer, short-term disability insurance protects you against a temporary loss of income. If you were to become injured and unable to work for one month, the insurance would pay you for that month. Short-term, in insurance terms, usually refers to a period of a year or less, although you can find policies that will cover you if you need to be out of work longer.
How much does the insurance pay?
You can buy policies that will pay your entire wage for the time you're unable to work, but what is more common is for the insurance to pay anywhere from 60 to 75 percent of what you normally earn. The insurance companies like to do this because it motivates you to go back to work when you're able since you want to earn more of an income.
You may be wondering how the insurance will calculate your normal income since you have an irregular income as a freelancer. They typically take an average across 12 months. So if you generally earn $60,000 per year, they will consider that $5,000 a month.
If you work as a freelancer, make sure you protect yourself with short-term disability insurance. This way, if you do become injured, you won't have to suffer without pay.
Contact an insurance provider to get a short term disability coverage quote today.