Insurance in the Gig Economy

Insurance in the Gig Economy



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

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

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

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

There’s one other major piece of freelancing you have to take into account—insurance. When you were an employee for another company, there were insurances in place to protect you and the 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 their spouse who remains on a company’s payroll—something for no other purpose than health insurance. If not, you can get coverage through the 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. Plan on getting a better plan. A 2016 analysis of healthcare costs found that a silver plan for a 40 year old non-smoker making about $30,000 cost $208 per month after the tax credit. But this is only the 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 the 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 emergency? If the answer is yes, you need life insurance. Consider term life rather than universal. There are a lot of opinions out there but many experts agree that cash value life insurance policies aren’t efficient investment vehicles for retirement planning.

Disability Insurance

What happens if you’re temporarily disabled for an extended period or permanently 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 the way you were as a freelancer. It won’t be long until you need to consider disability insurance. Prices vary depending on your age, your health and your habits—whether you smoke, for example, but plan on paying 1% to 3% of your annual salary.

Liability Insurance

There are very few businesses where making a mistake doesn’t expose you to a potential lawsuit. That’s why you need business liability insurance. Contrary to some people’s beliefs, home based businesses often aren’t covered under the owner’s residential home owner’s insurance policy. General liability policies will cover you up to a certain amount for injuries customer might sustain while on your property, copyright violations, or alcohol-related injuries if your business deals with alcohol. Some business might need a commercial policy that ups the maximum payout. Because each business has different needs, it’s hard to put an average price on this type of insurance but a sole proprietor will likely pay between $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 centers around their car, normal auto insurance might be enough but if you have employees or use your vehicle for commercial intent, you will probably need business auto insurance. Business auto insurance works a lot like the auto insurance policy you already know. Talk to an agent. They 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 other businesses have insurances specific to their industry that must be in place. Once you hire employees you will likely need worker’s compensation insurance as well. As you grow and evolve, ask a trusted agent or your industry trade group what’s required.

Bottom Line

Nobody likes to pay for insurance. It’s an added expense that feels like a waste of money but when it something happens 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 written permission from Attard Communications, Inc.

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7 Strategies That Boost Negotiation Success

7 Strategies That Boost Negotiation Success



Last Updated: Dec 13, 2017
Want to improve your negotiation skills and learn how to start from a winning position? Here are seven ways you can give yourself a head start in any negotiation.

If you want to start negotiations in a winning position, then you need to prepare like a tiger. That means you must pay attention to 7 crucial areas.

A negotiating situation exists when you are in any communication or problem-solving situation with others that can work out to your advantage. If there is no advantage to you, then don’t negotiate; you’ll only lose. As Sun Tzu, the author of “The Art of War”, said hundreds of years ago, “Engage only when it is in the interests of the state; cease when it is to its detriment. Do not move unless there are advantages to be won.”

Your overriding aim in any negotiation is to achieve the objectives you and your constituents have set. There are other aims, such as getting a good deal and improving your relationship with the other side. But getting what you want is tops. Always keep this aim firmly in your sights and don’t stop until you get it.

Once you know you’re in a negotiating situation, you need to gather information about the other side’s offer and use it to refine your own. Many negotiations come unstuck simply because one side or the other doesn’t listen, or check, or take the time to clarify exactly what the other side are offering, or indeed what they themselves are offering. This means that throughout a negotiation you should do tons of listening, clarifying and checking. And when it comes your turn to put over your case, you should use every skill you can muster to make sure they understand.

It is rare to go into a negotiation only representing yourself. Usually you negotiate as a representative of others, your constituents. Part of your preparation for negotiations has to be spent getting the best mandate from your constituents. Aim to get the support you need; the trust you need; the resources you need; the understanding you need; and the freedom you need.

A BATNA is your Best Alternative To a Negotiated Agreement and is the only certain way to be successful in negotiations. By preparing for negotiations with one party by sounding out an alternative deal with another party, you get walkaway power. It means that, even if the alternative isn’t quite what you want, you are still prepared to go there, if need be.

There are five questions to ask yourself when preparing the setting for a negotiation. They are: Who? (i.e. who is to take part and do what?); Where? (i.e. our place or theirs?); When? (i.e. what is the time scale?); Why? (i.e. what are we negotiating about?); and How? (i.e. how are we to present our case?).

The right attitude towards negotiations is the principal difference between successful and unsuccessful negotiators. Getting into the right frame of mind before you begin should be part of your preparation plan.

There is no guarantee that good preparation will lead to success in negotiations. But the chances are that poor preparation will lead to failure. Don’t take that risk. Pull out all the stops to get a head start and you won’t regret it.

Copyright Eric Garner, ManageTrainLearn.com

Eric Garner is Managing Director of ManageTrainLearn. He is a graduate of Cambridge University (England) and has years of experience as a manager, trainer, and learner. Visit http://www.managetrainlearn.com to download free training software and to sign up for the free MTL newsletter, “The Resourceful Trainer”.

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