Insurance in the Gig Economy

Written by promotiondept

September 27, 2018

Last Upted: May 19, 2016
One of most important things you’ll deal with wh striking out on your own as a freelancer is insurance coverage. Health insurance is most obvious type, but you’ll need coverage for or areas, too. Here’s an of those insurance types to get you started.

re are plty of reasons to become a freelancer. new “gig economy” is one where people are opting out of being on a company’s payroll. Instead, y’re forming ir own company and taking contract jobs. re’s plty to like about such an arrangemt. re’s oft more flexibility in your schedule and although you go from a couple of bosses to oft many, you get to pick who you work with. Owning your own business can also be financially lucrative as you gain a reputation for depbility and quality work.

But as we’ve be exploring in our gig economy series, re’s a lot to consider before quitting your job and going freelance. We looked at tax implications fact that you no longer have an employer paying a portion of your Medicare and Social Security taxes. That represts a lot of money.  

Next, we looked at retiremt. You no longer have a 401(k) that your company is paying into on your behalf. Retiremt ning is now a solo deavor so your pricing has to be high ough that you can contribute to a retirement account each month.

re’s one or major piece of freelancing you have to take into account—insurance. Wh you were an employee for anor company, re were insurances in place to protect you and company you worked for, but as a freelancer, it all falls on you.

First, and most important, is health insurance. Many freelancers get insurance through ir spouse who remains on a company’s payroll—something for no or purpose than health insurance. If not, you can get coverage through health insurance marketplace or through private companies. One word of warning: trying to save money by purchasing only catastrophic coverage isn’t in your best interest, especially if you have a family. on getting a better . A 2016 analysis of healthcare costs found that a silver for a 40 year old non-smoker making about $30,000 cost $208 per month after tax credit. But this is only individual rate. Providing coverage for a family will be significantly higher. Before leaving your job, figure out your insurance costs. Sometimes health insurance alone makes freelancing as your sole source of income impossible until business grows significantly.

RELATED: What Kinds of Insurance Does Your Small Business Need?

Life Insurance

If you were to pass away, would your family quickly fall into a state of financial emergcy? If answer is yes, you need life insurance. Consider term life rar than . re are a lot of opinions out re but many experts agree that cash value life insurance policies ar’t efficit investmt vehicles for retiremt ning.

Disability Insurance

What happs if you’re temporarily disabled for an extded period or permantly unable to work? Where will your income come from? You might qualify for disability and get a monthly amount from Social Security but that’s not likely to support your family way you were as a freelancer. It won’t be long until you need to consider disability insurance. Prices vary depding on your age, your health and your habits—wher you smoke, for example, but on paying 1% to 3% of your salary.

Liability Insurance

re are very few businesses where making a mistake doesn’t expose you to a tial lawsuit. That’s why you need business liability insurance. Contrary to some people’s beliefs, e based businesses oft ar’t covered under owner’s residtial e owner’s insurance policy. Geral liability policies will cover you up to a certain amount for injuries customer might sustain while on your property, copyright violations, or -related injuries if your business deals with . Some business might need a commercial policy that ups maximum payout. Because each business has differt needs, it’s hard to put an average price on this type of insurance but a sole proprietor will likely pay betwe $50 and $100 per month.

Business Auto Insurance

If you’re a sole proprietor who doesn’t run a delivery business or something else that cters around ir car, normal auto insurance might be ough but if you have employees or use your vehicle for commercial intt, you will probably need business auto insurance. Business auto insurance works a lot like auto insurance policy you already know. Talk to an agt. y will tell you if you need business auto insurance and how much.

Industry Specific Insurance

Doctors have malpractice insurance, financial advisers have errors and omissions insurance, and many or businesses have insurances specific to ir industry that must be in place. Once you hire employees you will likely need worker’s compsation insurance as well. As you grow and evolve, ask a trusted agt or your industry trade what’s required.

Bottom Line

Nobody likes to pay for insurance. It’s an added expse that feels like a waste of money but wh it something happs where you need it, you’ll be happy you had it.

© 2016 Attard Communications, Inc. All Rights Reserved. May not be reproduced, reprinted or redistributed without writt permission from Attard Communications, Inc.



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