Best Disability Insurance for Self-Employed

Guardian offers a lot of education and self-employed-specific policies, plus a great quote tool that all helped to earn the company our top spot. 

The quote tool asks questions about your gender, age, occupation, state you live in, and yearly income (if you want to disclose it). For a 45-year old male business owner working in California who earns $50,000 a year, we were quoted an estimated monthly cost of $179 for a $2,500 monthly benefit. This reflects the maximum benefit a person could qualify for from Guardian. We did note that we were instructed to call a financial representative if we filled out the “blue-collar worker/laborer” option. 

In addition to the ability to receive a quick quote estimate for coverage, Guardian offers several add-ons that benefit self-employed individuals. These include partial disability benefits if you can still work, but your productivity is reduced due to illness or injury; a Cost of Living adjustment that can help provide additional benefit payouts by accounting for inflation; or a policy that offers up to $1,000 a month to help cover undergraduate student loan expenses. This can be very helpful if you are in a medical profession and often have to pay for student loan expenses over a long time period. Once you’ve completed the quote tool and selected any add-ons, you can fill out your contact information to hear from a Guardian financial representative.

We saw elimination periods for their long-term disability policy that ranged from 30 to 720 days and coverage lasting up to 10 years of age 65. For their short-term policies, we saw benefit periods between 13 and 26 weeks. They did not list their elimination periods for their policies. 

Guardian offers its policies in all 50 states and the District of Columbia. They also have the highest possible rating from rating agency AM Best of A++ (Superior).

Illinois Mutual earned top marks from us for its low-quoted premiums, easy-to-understand policies, and additional benefits geared toward the self-employed who own their own businesses. Another unique aspect is the ability to extend the benefit period to age 67—many policies we reviewed only went to age 65. We also saw anywhere from 2 to 5 year benefit periods as well. 

Illinois Mutual offers an online quote tool that generates fast results for monthly premiums. For a 45-year old non-smoking male in Arizona with an annual income of $50,000 who works as a professional, we were quoted a premium of $55.53 for a $2,000 monthly benefit. To increase the benefit to $2,500 a month, the premium was $86.15. Both of these quotes were sometimes as much as $50 cheaper per month than some of the other policies we considered. This policy had an elimination period of 30 days, but we saw some options that extended up to 90 days. 

Rider options included an own-occupation rider, cost of living adjustment rider, guaranteed insurability rider, and a retroactive injury rider. 

In addition to being friendly on the wallet, Illinois Mutual also offered several perks to benefit the self-employed. Specifically, they have a PERKs program for business owners, which stands for Personal Paycheck Coverage, Elective Benefit Periods, Reimbursable Business Expenses, and Key discounts (5%) if a person wishes to purchase a disability and business expense plan. 

Unfortunately, Illinois Mutual doesn’t offer its policies in all states; you cannot purchase a policy if you live in Alaska, Hawaii, California, New York, or the District of Columbia. The company has an AM Best rating of A- (Excellent) for financial strength.

Like many in the freelance and gig economies, Breeze operates on a completely online platform. There are no salespeople involved in its online quote process, and their policies cater to freelance and gig workers, both in their quote search tool and in the riders and additional benefits they offer. As long as you’ve taken the time to determine what you want from your disability insurance, then you won’t miss a salesperson. 

Breeze utilizes an online quote tool to enter your birthday, gender, nicotine use, and what type of employee you are. This includes “independent contractor: I work as a 1099 independent contractor or am a freelancer” as well as “business owner: I am an owner or partner in a business.” We clicked the independent contractor button and were asked to further categorize our job: professional, technical, light labor (such as an auto mechanic or carpenter), or labor (such as rideshare drivers or roofers). 

For a 40-year old female who works light labor and makes $60,000 a year, Breeze recommended a policy that had a 10-year benefit period and a 90-day elimination period with monthly benefits of $1,200 at a cost of $47 a month. Increasing coverage to $2,300 a month would cost about $90. 

Before proceeding to the online application process, we were allowed to customize the coverage. Customizations included increasing/decreasing the coverage, changing the benefit and elimination periods, or adding on optional riders. Examples included an automatic benefit increase rider, guaranteed insurability rider, residual disability benefit rider, and a supplemental disability insurance benefit rider (which would pay even if you receive benefits from Social Security or other organizations). 

Breeze offers disability insurance coverage in all states except New York State. Breeze’s policies are underwritten by Assurity (another company that made our list), which has an AM Best rating of A- (Excellent).

When you’re self-employed, waiting even 30 days to start receiving disability benefits can seem too long. If this is the case, Mutual of Omaha may be a good option for you as they offer elimination periods as short as 0 days for their short-term disability products. Most of the 0-day elimination policies are related to if you were to experience an accident. For sickness or illness, Mutual of Omaha advertised a 7-day elimination period. They also offer 14-day options as well as the more traditional 30, 60, and upwards. Their long-term disability elimination periods begin at 60 days.

We liked that Mutual of Omaha was very upfront with many of their terms when describing their short- and long-term policies, including explaining the maximum monthly base benefit and benefit periods. They issue disability policies from ages 18 to 61 although you can continue long-term disability coverage up until age 75 if you choose. 

Unfortunately, they do not have an online quote tool, so it was difficult to evaluate how their varying terms stacked up to the policy costs. You will need to contact an agent to find out how much you would expect to pay; however, it's beneficial to speak with someone because there are so many customizable options, benefits and riders that could be advantageous.  

Mutual of Omaha earned an AM Best rating of A+ (Superior), which speaks to the company’s financial strength. Unfortunately, they don’t offer all their disability products in California and New York state.

We won’t sugarcoat it: If you are in a high-risk occupation class (such as manual labor), you’ll have greater trouble securing a disability policy. This comes down to risk: Because you are more likely to get injured on the job, the insurance company has a greater chance of having to pay out. Fortunately, companies like Assurity will extend disability benefits to skilled and unskilled manual occupations where workers are commonly self-employed, including farmer, plumber, electrician, painter, crane operator, beautician, and auto mechanic.

The company advertises its streamlined application process and guarantees to let you know within four days if you’re approved. The maximum benefit is 60% of your income up to $3,000 a month, and Assurity will issue policies for those ages 18 to age 59. They also offer a partial benefit if you are able to return to your work on a part-time basis. 

Assurity has an online quote tool that we found difficult to use when searching for a high-risk occupation. We tried different incomes, states, and labor positions, but were directed to contact an agent. However, they do advertise some of their rates, such as $40 a month for a 45-year-old electrician who earns $52,000 a year with a 2-year benefit period and a 90-day elimination period.  

Assurity also offers several key features that benefit the self-employed and high-risk worker. This includes benefits that pay for home modifications should you become injured and require special changes, coverage for vocational rehabilitation, and a waiver of premium once Assurity approves your claim. They also offer add-on riders for critical illness, catastrophic disability, and guaranteed insurability, which allows you to increase your premium without having to undergo a medical underwriting process. 

In terms of coverage, Assurity will not pay short-term disability benefits for a normal (uncomplicated) pregnancy. However, if you have pregnancy-related complications that keep you from your self-employed job, they will help pay for the accrued medical expenses. 

Assurity has an AM Best rating of A- (Excellent). This rating isn’t quite as high as some of the companies reviewed but does represent AM Best’s fourth-highest rating. Assurity provides disability insurance in all states except New York.

Northwestern Mutual is a financially sound company that offers short- and long-term disability policies that are highly personalized. They advertise that they offer short-term disability coverage that pays between 50% and 100% of your salary. That kind of potential protection earned it our “Best for Income Replacement” honors. 

Also, many of the policies we reviewed do not provide disability coverage for higher-income individuals. Northwestern Mutual offers a “Medical Own-Occupation” policy that is specific to doctors and dentists, which caters to those who traditionally have higher incomes and may need partial to full benefits. The “own-occupation” part of the policy means the insurance company will pay you disability benefits if you can’t work in your specific occupation but could work in another capacity. 

Northwestern Mutual leans on its advisors, so they don’t offer quotes online or advertise their elimination periods. Their policies are also highly customized to the policyholder. The company advertises that they have policies for a wide range of employment types, from medical professionals to part-time workers. You’ll need to share your personal goals and budget with your advisor to determine how much coverage you may need. 

Having to consult an advisor doesn’t mean the approval process will be a lengthy one. In 2019, Northwestern Mutual accelerated its underwriting policies for disability products which reduced the company’s average underwriting times from 28 days to one day. 

Northwestern Mutual offers its policies in all 50 states and the District of Columbia. They also have an AM Best rating of A++ (Superior), which is the highest possible rating. This is especially good for income replacement because it provides peace of mind that your policy will be paid out. According to their website, they pay out more in individual disability insurance benefits than any other major insurance carrier.