We advise every consultant to include two things in their disability insurance policy.
Own Occupation Coverage
Enhanced Partial Disability Benefit
True Own Occupation Coverage
A policy that has an Own Occupation definition of what it means to be disabled protects your income as a consultant better than many other types of policies. Guardian1 has one of the best own occupation definitions of disability in the industry. It provides you the ability to receive your full total disability benefit, even if you are engaged in another occupation. This means that if you have the energy, interest, and motivation to pursue another occupation, the True Own Occupation definition does not prevent you from doing so.
Recovery Benefits are Critical for Consultants
If you've been a consultant for more than a few months, you know how hard it was to build your business. It takes time and effort to get the contracts with clients that have made you successful. A sickness or injury can derail those contracts and eliminate your income. When you recover from that sickness or injury (and many people do), how long do you think it will take to rebuild your business? Will the 50-year-old you have the same energy to pursue those same opportunities as the 30-year-old you did? Just because you're working full time again as a consultant doesn't mean that your income will bounce right back.
Many disability insurance policies wouldn't consider you disabled in this situation, and it's possible that no benefits would be paid. Guardian's ProVider Choice Premier policy1 has an optional provision that fixes this problem. The Enhanced Partial Disability Benefit rider, which we recommend for all consultants, does not require you to have a loss of time or duties at your job in order to continue receiving benefits. All that is needed is a 15% loss of income solely as the result of a qualifying sickness or injury. Thus, it allows you to continue to receive a monthly benefit while you're working full time to rebuild your business and recover financially, not just medically.
Special Programs for New Consultants
Many consultants come from salaried positions where they have a stable income. They know they can make more money as an independent business owner and have all the benefits of being their own boss. The challenge is that in the first year or two, they don't know exactly what their income will be. This makes it difficult for some companies to provide a disability insurance policy to protect that unknown income. Many companies require new consultant business owners to provide a full year of tax returns before they will consider them.
Guardian1 has a special underwriting program tailored to new business owners in this situation. Startup Savy Underwriting allows Guardian1 to consider 50% of your prior salaried income in determining how much disability insurance you may qualify for. If you're between the ages of 30-50 and have at least 5 years of experience in your industry, you do not need a full year of taxes to buy a disability insurance policy up to $5,000 per month.
This Startup Savy underwriting program allows you to buy a policy sooner than you can with many other carriers. When we add the optional future increase option rider to your policy, you have the option of buying more disability insurance as your income increases without any more medical underwriting questions. Using Startup Savy underwriting in conjunction with the future increase option rider is a great way for new consultants to buy a disability insurance policy and have it grown with them throughout their career.
1Individual disability income products underwritten and issued by Berkshire Life Insurance Company of America (BLICOA), Pittsfield, MA. BLICOA is a wholly owned stock subsidiary of The Guardian Life Insurance Company of America (Guardian), New York, NY. Product provisions and availability may vary by state.