Here we will help you address these questions and manage your concerns.
Disability insurance can provide a source of income if you become disabled and can't continue working, as this article explains. It's critical if you are the sole or primary breadwinner for yourself or your family, says Ben Henry-Moreland, CFP with Freelance Financial Planning in Omaha, Nebraska. Some insurers offer individual disability policies. Some trade associations offer policies as well.
A key consideration is whether a disability policy pays if you can't work in your “own occupation," or only if you can't work in any capacity — an “any occupation" policy. Ideally, your policy will pay benefits if you can't work in your own occupation.
“If you can no longer work in construction, where you earn on average $75 per hour, but can still flip burgers, the [any occupation] policy might not pay out," says Cheryl Sherrard, director of financial planning with Clearview Wealth Management in Charlotte, North Carolina.
You typically can't deduct disability insurance premiums from your income. However, if you — rather than an employer — have paid all the premiums, benefits typically aren't taxed.
“It's not really a question. You need health insurance," says Henry-Moreland. Some gig workers go without, however, assuming the only insurance they can afford would have a deductible that's so high they'd never be able to meet it. To be sure, if you experience a serious illness or injury and need to borrow to cover a high deductible, it may take time to pay off the debt. However, going without coverage may mean you end up declaring bankruptcy. Moreover, depending on your income and household size, you may qualify for tax credits that can reduce the premiums.
And, as a gig worker or self-employed individual, you may be able to deduct health insurance premiums from your income, lowering your tax bill. You'll have to meet a few requirements/restrictions. Among others, you can't claim the deduction during any months you were eligible to participate in an employer-sponsored plan.
If you have a high-deductible plan (for 2019, these are plans with deductibles of at least $1,350 for individual coverage, and $2,700 for family coverage) and have some extra money, you can contribute pre-tax dollars to a Health Savings Account (HSA) to help cover future medical expenses.
Jodi Helmer, a freelance writer living outside Charlotte, North Carolina, opened an HSA several years ago. “I put money in my HSA now, so when I need it down the line, it's there," she says.