Insurance for your business of one
March 5, 2019
Buying insurance as an individual tends to be costlier than being insured under an employer. It can be tempting to forego insurance especially if you’re tight on money. But before you shut out insurance completely, there are some things you may want to think about for your unique situation to see if it may be worth it to you in the long-run.
Assessing your insurance needs
Getting insurance is not a one-size-fits-all process. Each person’s needs vary. Insurance is really about finding ways to protect yourself, your business, and your family from risk.
Some risk factors to consider:
- family health history
- overall health
- lifestyle habits
- pre-existing conditions
- if you engage in high-risk sports
- business assets
Anyone with a car or anyone who owns a home knows that insurance may be a must-have. The costs to replace those assets in the case of an incident often exceeds the cash we have on hand.
Pro tip: Insurance can be costly, but some are available based on your level of income or how much your business makes, which can make it more affordable than you might think
If you can only afford one kind of insurance at the moment, take a look below to see which would be the best for you.
- Health insurance
- Dental or vision insurance
- Disability insurance
- Liability (business) insurance
- Life insurance
Options for health insurance
If you’re able to get insurance through your spouse, you may find this route to be the cheapest and easiest. If this isn’t possible, you can try Marketplace or Medicaid. Your cost of insurance will depend on your income and household size. Enrollment is usually from November to mid-December and coverage begins on January 1st of the following year. If you’re outside open enrollment, you can check with your state to see if can still apply based on life changes and circumstances. It’s possible to apply as a freelancer and update your income as needed. Filling out an application can help you determine if you qualify for premium tax credits or other savings on a health plan.
Depending on the state you’re in, you may be able to get short-term health insurance as you’re waiting for longer-term insurance. These plans last 12 months maximum and only cover major medical costs. They do not cover normal doctor’s visits.
Another available option is joining a healthshare ministry like Liberty HealthShare. Healthshares aren’t insurance—members agree to pay a share of other members’ medical bills, in addition to a monthly premium.
If you’re enrolled in a high-deductible health plan and can’t be claimed as someone else’s dependent, you may want to consider opening a Health Savings Account (HSA). You can get tax advantaged savings for qualified medical expenses including prescriptions, co-pays, and hospital visits. What you don’t use in your account can be invested and rolled over into the next year, accruing tax-free interest. Some plans on Marketplace may note if the premium qualifies toward an HSA.
Dental and vision insurance
Dental and vision plans can be included in your medical plan if you decide to get one through Marketplace or Medicaid. If you do get them separate from your medical insurance provider, you can check out eHealth to see plans available to you. If you’re not needing much dental or vision work, it may be better to pay out of pocket when you need it. Retail stores that offer vision care like Costco or Target may fit your vision needs and bill if you don’t need regular visits.
For dental, you can join a dental network like DentalPlans or CareFreeDental to get savings on a visit-by-visit basis. You would pay a membership to get discounted rates from participating dental providers. Dental schools may be another option as dental work are usually offered at a lower cost.
Short-term/long-term disability insurance
A type of insurance many forego is disability insurance. If you’re sick or injured and can’t work for some time, disability insurance may be helpful and provide you with some income. Coverage depends on your income. You’ll need to figure out your monthly expenses as well as an idea of what you’ll need. You can also get partial disability if you can still work but less than you used to.
Long-term disability insurance companies can require you to prove that you’ve been working full-time self-employed for at least two years, which can mean showing two years of tax returns from your business. If you’re currently employed with a corporation and thinking of leaving as a full-time soloist in the near future, you may want to consider purchasing a disability insurance policy before you leave the company. If you get a non-cancellable, guaranteed-renewable long-term disability policy, you’ll be covered even if you leave the company, as long as you continue paying the premiums.
The difference between short-term and long-term disability is the coverage period. Short-term disability is often considered available for up to 6 weeks. There are several options available, along with a healthy amount of misinformation. Check out our more in-depth overview of short-term disability, and learn about companies like Trupo, who recently partnered with the Freelancer’s Union and offers short-term disability in the state of Georgia if you become a Freelancer’s Union member. bSolo is not affiliated with Trupo or the Freelancer’s Union and aren’t endorsed by either party.
You can also try checking with your state to apply for state disability benefits, which may be less expensive than a private policy.
Liability, business and property insurance
Liability insurance protects you and your business for claims against your company for injury or loss, including mental anguish or professional turmoil, to a third party. Even if a deliveryman slips on your property, you may be liable for their injury. It is common for a brick-and-mortar business to get liability insurance but even if you provide services, there is a chance it may cause harm to a third party, like a client, in the form of bad advice or bad results.
Depending on your business, the type of insurance you’ll need may vary. A general umbrella policy may make sense and is often required if you are consulting with corporations. A policy that covers you for up to $1 million dollars may not cost as much as you would think it does.
If you have an official business entity, and you purchase an umbrella policy, any assets or equipment you purchase could be covered under your umbrella policy, however, you should confirm that those assets are covered. If they are not, you may want to consider insurance to protect any business equipment or assets. For example, if you do video production, all of your camera and lighting equipment should be insured in the case that it is stolen.
You may want to consult an insurance agent to find what works best for you. You don’t have to pay until you sign a contract so it wouldn’t hurt to get a first meeting or shop around to compare quotes from different providers.
The topic of life insurance can seem morbid. If you have dependents or anyone depending on your income, life insurance protects your survivors in the case of your death.
Some banks may require life insurance if you need to borrow a loan for your business.
Two primary types of life insurance are term and permanent life insurance. Term insurance tends to be more affordable as the protection only lasts for an agreed upon amount of time (ie: 10 to 30 years), but some plans have the option to convert the policy to permanent.
Permanent (or whole) life insurance can be relatively more expensive as it provides coverage for as long as you are alive. The money in your account can accumulate and grow like an investment account, but there are better investing options out there if you’re thinking of using this account for the purpose of investing.
Squeezing coverage into your start-up budget can be tough but it pays to be safe than sorry. The good news is you may be able to deduct some of your insurance from your taxes. This isn’t a comprehensive list of available insurance. What you need may differ depending on your business and lifestyle. Please consult an insurance agent to find the best plans for your needs.
What if bSolo could help you with your insurance planning, finding and buying needs? We’re noodling on the idea. If you’re interested, sign up to learn more.
This article is being provided for informational purposes only and should not be viewed as a recommendation of any product, service or strategy referenced.