It’s difficult to pinpoint exactly how many Americans are self-employed, but it’s probably more than you’d guess. According to the Center for American Progress, the BLS Current Population Survey from the BLS shows that 16.5 million people are self-employed; that’s about 10.4% of the U.S. working population. That’s a lot, but it may be low. Data from the IRS shows that 27 million Americans filed Schedule C tax documents, indicating that they are self-employed. Either way, a significant portion of U.S. workers are self-employed – and many of them need disability insurance.
The Many Faces of Self-Employment
One reason it’s hard to agree on the number of self-employed individuals is because it’s hard to agree on what exactly it means to be self-employed. For example, different individuals may:
- Own a brick-and-mortar business.
- Offer professional services on a freelance basis.
- Work for businesses as independent contractors.
- Have side gigs.
Clearly, self-employment can take many forms. Despite the differences, all self-employed individuals have some things in common. They have taken charge of their careers, allowing them to succeed (or fail) based on their own abilities. They have also taken responsibility for their own compensation.
The Financial Responsibilities of the Self-Employed
When you’re traditionally employed, it’s easy to take things for granted. Your employer gives you a regular paycheck and covers their share of Social Security and Medicare taxes, unemployment insurance and workers’ compensation. Your income and FICA tax obligations are deducted from your paycheck, so you don’t have to worry about setting the money aside. Many employers also provide benefits that include health insurance, life insurance and disability insurance.
Self-employed individuals, whether they’re freelancers or shop owners, don’t have these luxuries. Their income typically fluctuates based on how much business they can drum up, they have to handle all tax obligations themselves, and they don’t have access to employee benefits. It’s the trade off of being in charge of your career and enjoying unlimited income potential, but it means that self-employed individuals need to be extra smart about money.
A big part of this is securing disability insurance. If a self-employed individual has to stop working because of an illness or injury, they have no employee benefits or paid time off to fall back on. Individual disability insurance provides a critical safety net.
Finding Self-Employed Individuals Who Are Good DI Candidates
Although anyone who depends on a paycheck can benefit from income protection, not all self-employed individuals are good candidates for DI.
- Does the individual earn enough to afford and warrant disability insurance? While employees have minimum wage protections, self-employed individuals do not, and some don’t earn enough to justify coverage.
- Does the individual also have a traditional job? Many people are self-employed as a side gig. These individuals may not depend on their self-employment income, and they may have group disability insurance through their job. However, they may still be interested in supplemental disability insurance.
Because there are so many self-employed individuals in the U.S., and because there’s so much variation in the type of work they do, it’s impossible to provide a complete list of potential markets. However, here are some good markets to explore:
- Business owners. People who own restaurants, salons, shops, doctor’s offices, dentist’s offices and other businesses are great candidates for disability insurance. In addition to coverage for their own incomes, they may want business overhead expense insurance, business loan disability insurance and coverage for any employees. Learn more about the business owner market.
- Professionals. Many accountants, architects, graphic designers, photographers, and consultants operate on a self-employed basis. They may have a physical office, but they may work from home.
- Independent contractors. In some industries, it’s common for companies to hire independent contractors instead of employees. For example, many software developers are classified as independent contractors. These individuals may work primarily for a single company. However, because they are classified as independent contractors, they may not have access to employee benefits, and this makes them prime candidates for individual disability insurance. High-end hairstylists and makeup artists could be another good market, as many of these workers are independent contractors, and the top earners in the field could benefit from income protection.
When you offer disability insurance to self-employed individuals, you’re helping them protect their futures and safeguard the lifestyle they’ve worked so hard to create. You’re also helping yourself to a lucrative market and the potential for additional commissions. Are you ready to learn more about the self-employed disability insurance market? Download the Self-Employed Sales Kit.
