Chapter 4: Wait — I don't work for a corporation!
One of the biggest differences in being self-employed from working for a single employer is the need to create your own benefits package.
In this chapter, our panel of experts talk you through different benefit options and how to create a package that helps you plan and protect your future. You'll notice the worksheet summarizes four different insurance benefits for you to build towards.
Protect yourself and your future
Be a good boss to yourself. Make a plan to build a benefits package that allows you to take care of yourself now and into the future.
Health insurance helps to pay for medical expenses. If you elect for an option with a copay, you'll need to plan to pay a certain amount for every visit you make to the doctor. Another option is coinsurance — it outlines a percentage you'll need to pay after the deductible is met.
Life insurance is a great product that helps protect your business, pays off debts and leaves money to your loved ones. You have both term and permanent options with life insurance. Term insurance is temporary and is generally less expensive. Permanent insurance typically lasts the life of the insured and may build cash value. You could access the cash value that's built for some expensive life events — as long as you make sufficient payments to keep the policy in force.
Retirement planning helps you build for the future. Traditional accounts offer tax breaks up front, but you'll have to pay taxes once you retire. Roth accounts don't have upfront tax breaks, but you'll likely have tax-free withdrawals in retirement.
Disability insurance offers a huge relief by delivering income if you can't work because of a disabling illness or injury. The percentage of income replacement promised to be paid when you start to receive your payouts is called a benefit percentage.
This is a conversation you won't want to miss. Listen closely and make a plan to give yourself the protection you need.
Your chapter 4 checklist:
- Watch the Wait - I Don't Work for a Corporation! video
- Financial Foundation for Freelancers Worksheet
- Create a plan to build your own benefits package