Disability insurance replaces income if you are unable to work for an extended period of time because of a physical or mental illness, disease or bodily injury. Long-term disability coverage typically begins after the policyholder is disabled and unable to work for at least six months. It can extend for a specified number of years or until the insured retires or reaches the age of 65, depending on the policy selected.
Home-based business owners who are interested in disability insurance may want to negotiate for a shorter waiting period after the onset of disability if their only source of revenue is from their business. Be aware that a shorter waiting period will result in a higher premium.
Home-based business owners may also want to consider an added rider to a personal disability policy for business overhead insurance. This type of coverage insures that a business can continue to function while the owner is recovering from a disability and that standard business expenses, such as payroll, utilities, rent, etc., continue to be paid.
If you get turned down for disability insurance or find the cost prohibitive, reapply next year. The longer you're self-employed (three years is a marker) and the more consistent your business, the better risk you are to an insurer.