Can You Get Disability Insurance If You’re Self-Employed?
Self-employed professionals have more freedom—but also more financial risk. If you’re a freelancer, independent contractor, or small business owner, your income likely depends on your ability to work. So what happens if illness or injury takes you off the job?
That’s where disability income insurance comes in—and yes, you can get Disability Insurance if you’re self employed.
Why You’re More Exposed Without It
Traditional employees often have short- or long-term disability coverage through their workplace. But as a self-employed individual, there’s no safety net unless you build one yourself. Disability insurance is your personal income protection plan—replacing part of your earnings if a covered condition prevents you from working.
Without it, you could be forced to drain savings, pause your business, or take on debt just to stay afloat.
How It Works for Self-Employed Individuals
The underwriting process looks a bit different when you’re applying for Disability Insurance as self-employed person or Business Owner. Carriers will want to verify:
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Your net income (typically via tax returns or profit/loss statements)
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Your job duties and physical requirements
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How long you’ve been self-employed
With this info, they can determine the appropriate benefit amount, waiting period, and length of coverage. Some carriers even offer policies specifically tailored to entrepreneurs.
At Diversified Insurance Brokers, we work with business owners in all industries—from real estate agents to consultants to small shop owners—to create disability protection that works with their income and lifestyle.
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FAQs: Disability Insurance If You’re Self-Employed
Do self-employed people need disability insurance?
Yes. If you’re self-employed, there is no employer disability plan to fall back on. Your income stops immediately if you become sick or injured, making private disability insurance essential for protecting business and personal expenses.
How does disability insurance work for self-employed individuals?
It replaces part of your income—typically 50% to 70%—if an illness or injury prevents you from working. Benefits are paid monthly for a set period or until recovery, depending on the policy.
What income counts when applying for disability insurance?
Insurers look at net taxable income after business deductions. Some policies allow add-backs for depreciation or one-time expenses. Good documentation helps secure stronger benefit amounts.
Can I get coverage if my income varies year to year?
Yes. Most insurers average the last 2–3 years of tax returns to determine eligibility and benefit amounts. Some offer flexible coverage specifically designed for fluctuating income.
What is “own-occupation” disability insurance and why does it matter?
An own-occupation policy pays benefits if you cannot perform the duties of your specific profession—even if you can work in another role. It’s one of the most important protections for self-employed professionals.
Are premiums tax-deductible for self-employed individuals?
Premiums are generally not deductible for personal disability insurance. However, disability policies structured for business overhead expenses—such as key-person disability or BOE coverage—may be deductible as business expenses.
What is Business Overhead Expense (BOE) disability insurance?
BOE disability insurance pays your essential business bills—rent, utilities, employee wages—if you become disabled. Many self-employed professionals use BOE alongside personal disability coverage to protect both business and income.
How much disability coverage should a self-employed person have?
Most people aim to cover enough income to pay personal living expenses, debt obligations, and major financial commitments. Higher-earning entrepreneurs may also layer policies for stronger protection.
Can I get disability insurance if I have health conditions?
Yes, but terms may vary. Some conditions result in higher premiums or exclusions, while others may still qualify for standard rates. Each insurer evaluates risk differently.
Where can self-employed professionals compare disability insurance options?
You can compare benefit amounts, waiting periods, own-occupation definitions, and rider options through a disability insurance specialist who can review policies across multiple carriers.
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
