5 Steps to Create Your Own Self-Employed Benefits Package

Think you have to sacrifice benefits when you leave a traditional job? Laura explains how to create your own benefits package when you're self-employed and answers several related questions from Money Girl readers and podcast listeners. 

Laura Adams, MBA
12-minute read
Episode #533

3. Get a Term Life Insurance Policy

Many employers offer life insurance—but you typically lose it when you leave the company. The good news is that if you’re in relatively good health, finding affordable life insurance is probably easier and less expensive than you think.

So, if anyone depends on you or would be hurt financially if you weren’t around, such as children, a spouse, partner, or aging parents, you need life insurance.

First, consider if you need a life policy. You’ll never get to enjoy it because the payout goes to your beneficiaries after you die. The purpose is to give you and your loved-ones peace of mind that your financial life will be okay even after an unexpected, deadly tragedy. 

So, if anyone depends on you or would be hurt financially if you weren’t around, such as children, a spouse, partner, or aging parents, you need life insurance. There are different types, such as term life and permanent life, depending on your financial goals.

  • Term life insurance provides a benefit upon the death of the policy owner for a set period, such as 10 or 20 years. I prefer term insurance because it’s inexpensive and gives you the most benefit for the dollar.
  • Permanent life insurance includes a variety of products such as whole life, universal life, and variable life. I won’t get into the details on each of those, but they provide a death benefit and an investment all wrapped up in one. They’re also called permanent life policies because you get lifetime coverage.

Life insurance coverage is more affordable than most people think. For example, if you're in your 30s with relatively good health, your premium for a 20-year, $500,000 term policy would be about $200 per year. You can shop and compare term life quotes at sites like Haven Life, Liberty Mutual, and USAA

Even if you do get a policy through work, it’s usually only one or two times your annual salary, which is typically not enough for individuals with a spouse and children. Aim to have coverage that’s at least 10 times your annual salary using one or more policies.

Life insurance can’t make you immune to a tragedy, but it should be a pillar of your personal finances. If you want to live life more confidently, it’s critical to protect your assets and support your loves ones with life insurance coverage. 

4. Don’t Forget About Disability Insurance

Disability insurance is another coverage you typically get on an employer-provided benefits menu, but is canceled when you leave the company. It’s often overlooked by the self-employed, but is very important.

Did you know that you’re more likely to suffer a disability than you are to die before the age of 65?

Did you know that you’re more likely to suffer a disability than you are to die before the age of 65? And when a long-term disability occurs, the average absence from work is 2½ years.

Remember that health insurance only pays a portion of your medical bills; it doesn’t pay your living expenses, like housing or food, if you can’t earn money for an extended period. A disability policy pays a percentage of your gross income, such as 60% or 70%, if you can’t work due to a disability, illness, or accident.

Not being well enough to work could cause a major financial strain for you or family members who depend on your income. Social Security is only available after you’ve been out of work for a year and are completely disabled. You may be entitled to worker’s compensation insurance, if you suffer from a work-related injury.

Question: A podcast listener named Alexis says, “I’m a big fan of the show! My husband is a carpenter and we both have health insurance in California through my work. Is there additional insurance we should purchase since he works with tools and machinery, or is regular health insurance sufficient?”

Answer: I always recommend having a disability policy—but especially if your work makes you inherently prone to injuries. Several states, including California, offer a disability program for workers who pay into the system through payroll deductions.

If you’re self-employed, you can elect to pay state disability premiums, which may be less expensive than a private policy. Shop both options to find coverage that makes sense for your work and financial situation. Check out companies including MetLife, State Farm, and Mutual of Omaha. 


About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.