Why Freelancers Need Disability Insurance

As freelance writers, we believe ourselves to be invincible. We use our ninja-like focus to ignore the parade of distractions in our home office. We meet all our client deadlines while still taking time to sew a Martha Washington costume for our daughter's school play. (Okay, I don't do that because I don't have kids, but you might.) We wrestle unruly words until they submit to our will and become brilliant prose worthy of our bylines. Sometimes, we even get out of our pajamas before noon.

Yet we are not invincible. I know this because I nearly slipped to my doom in the shower a few weeks ago. Had I not been able to recover my balance, the fall probably would have broken my back and smashed my writing hands. In that split second, I imagined what it mean if I was no longer able to write. Besides the sheer frustration of not being free to work on my craft, it would signal the end of minor luxuries like heat, food and running water.

If, like me, you enjoy these luxuries too much to be without them, it's time to explore income replacement options and disability insurance for the freelance writer.

What is Disability Insurance?

Typically, insurance companies offer two distinct forms of disability coverage: short-term disability and long-term disability. Your short-term policy covers you in the days following an accident or injury and lasts for a predetermined period, often five years. Long-term disability kicks in after the short-term policy ceases. For now, we'll focus on short-term disability because this is the most pressing insurance you don't possess right now.

Unlike health insurance that covers the cost of your medication and hospital stay after an accident, short-term disability provides you cash to use on whatever you like. Most people use this money to replace the income they lose while being out of work, but the AFLAC website says you can also use it go out to dinner. I've yet to meet anyone in a full body cast ready for a night on the town, but I'm sure that's to illustrate the point that this is your money and no company bureaucrat will govern how you spend it.

Keep in mind that disability insurance is not simply for accidents and unexpected hospital stays. Most company maternity plans are short-term disability policies in disguise. Perhaps you believe you can continue working your same hours during your pregnancy and after the birth of your child. If you can, more power to you. But what if there are complications that keep you in the hospital for weeks after the delivery? What if your doctor places you on bed rest and you find it impossible to work in bed? This is when having short-term disability coverage will allow you to avoid undue financial stress and focus on the happy occasion.

How Much Does Disability Insurance Cost?

As with any insurance policy, there are a number of factors that dictate your premiums. Age, gender, weight and your smoker status all play a role. In addition, participants of high-risk activities will pay more than the avid couch potato. (Sorry skydivers!) Even in the face of these unchangeable personal factors, you can directly affect your rates by playing with the waiting period and the benefit amount.

For example, I can expect to pay about $32 per month for $2,000 in disability coverage. This means I would receive $2,000 each month while unable to work due to a qualified reason. On the surface, this affordable option fits my needs.

On the other hand, the MetLife calculator I'm using doesn't tell me what the waiting period is for this coverage level. Must I wait a week after disability or three months before I can file my claim and start receiving benefits? A week without money is doable, 90 days is financial suicide for me. The fine print on the calculator goes on to say that this is only the premium during the first year. The amount of premium increase I can expect in subsequent years may determine the usefulness of this policy.

Before you purchase any insurance, make sure you shop around and compare every factor. If you know you can't fit the policy into your budget with a one-week waiting period, consider the 30-day option instead. Although I mentioned two insurance companies - MetLife and AFLAC - they are not the only insurance providers ready to offer you income replacement options.

Don't wait until your ankle trips out on you in the shower to realize you aren't invincible. You've worked too hard building your freelance business to watch it all crash down with the shower curtain.