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Getting insurance when you’re self-employed

Key takeaways

  • When you’re self-employed, you’ll need to consider purchasing insurance often provided by employers, including disability, life, health care, and dental insurance. 
  • Business insurance to consider includes general liability, product liability, professional liability, commercial property, home-based business, and business owners’ policy. 
One important part being self-employed is making sure you have insurance to protect yourself, your family, and your business in case of an accident, a medical issue, or other unexpected event. Types of self-employed insurance you should consider include: 
  • Disability and life insurance 
  • Health insurance 
  • Dental and other insurance 
  • Business insurance 

Disability and life insurance for self-employed

Many employers offer disability insurance (both long-term and short-term) and life insurance to their employees. These types of insurance help protect you and your loved ones should something unexpected happen. Since you’re working for yourself, you need to take steps to protect your income if you can’t work for a short or long period. 
Consider your individual situation to decide what level and types of coverage you need. For example, if you have 3 to 6 months of emergency savings, your family might be OK if you miss a few months of work yet struggle during a longer gap. 

Health insurance for self-employed

Finding health insurance coverage is a key concern for many freelancers and small business owners. You may consider one of the four options below: 
COBRA   ABOUT Cobra allows you to continue coverage under your former employer's plan, but you'll typically pay the full cost of coverage plus a 2% administration fee.   PROS You can keep the plan you're familiar with. COBRA can be a short-term bridge to Medicare coverage.    CONS COBRA can be very expensive because most employers don't subsidize premiums. Coverage usually only lasts 18 months.      Spouse’s plan   ABOUT If you have a spouse or domestic partner whose employer offers a plan that suits your needs, this is typically the best choice.   PROS This may be the least expensive option.   CONS Your coverage depends on a spouse or domestic partner keeping their job. Not all plans are available to domestic partners.      Public marketplace   ABOUT The federal or a state marketplace established by the Affordable Care Act (ACA) offers a range of coverage options. See your options at   PROS You may qualify for a federal tax subsidy, which can lower your premium. Subsidies are based on several factors including expected income, but not assets.   CONS Plans may be expensive without the tax subsidy, although a range of plans are available so it's worth exploring.      Private insurance   ABOUT Insurance purchased through an agent, professional association, etc.   PROS Depending on where you live, you may find more options than in the public marketplace.    CONS Prices and features can vary widely, and not all plans may conform to ACA requirements. Federal tax subsidies do not apply to these plans.
A health savings account (HSA) can help reduce your taxes and pay for qualified medical expenses now and in the future. If you want to contribute to an HSA, you must be enrolled in an HSA-eligible health plan, so think about that when choosing your health insurance.

Dental and other insurance for self-employed

Dental insurance, vision insurance, pet insurance—you can get insurance for all kinds of things. When looking at insurance options, be sure to consider the cost of your premiums, any plan maximums, and the likelihood you’ll need the insurance. How would you manage the expense if you didn’t have insurance? Taking a few minutes to add up the costs and consider “what if” scenarios can help you make a more confident decision. 

Business insurance for self-employed

Business insurance helps to protect you from the unexpected costs of running a business. It may help to fill in the gaps to make sure both your personal assets and your business assets are fully protected from unexpected catastrophes. The 6 different types of business insurance include: 
  • General liability 
  • Product liability 
  • Professional liability 
  • Commercial property 
  • Home-based business 
  • Business owners’ policy 
Depending on what products or services you’re offering and how your business is structured, your state may require you to have business insurance. 

Consider a health savings account (HSA)

With an HSA, you can pay for qualified medical expenses in a tax-advantaged way.

More to explore

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