Insurance for the Self-Employed - Part 12 Step by Step Into Self-Employment on the Net
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| Photo by Aldrin Rachman Pradana on Unsplash |
You can take out insurance against a whole range of risks.
But which insurances are really useful or even necessary for start-ups and the self-employed?
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[Overview of the article series " Step by step into independence on the Internet "]
Insurance for the Self-Employed
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| Insurance for the Self-Employed - Part 12 Step by Step Into Self-Employment on the Net |
When I started my own business, the subject of insurance naturally also played an important role.
I'm more the type who at least wants to insure existential risks, but on the other hand, don't have to “overinsure” every unlikely danger.
And yet I made mistakes. You can find my experiences and tips for important and more optional insurances below.
Important Insurance
Among the most important insurances, I have listed all those that in my opinion should be taken out by the vast majority or even all start-ups and self-employed people.
It is either compulsory insurance, such as health insurance, or insurance against existential risks. So risks that can threaten your existence.
Health Insurance
The question “ Do you need health insurance? ”I only recently covered quite a bit here on the blog. Quite apart from the fact that illness/injury can result in very high financial costs, health insurance * is now mandatory.
Whether you decide to remain in statutory health insurance or to join private health insurance needs to be carefully considered. Both variants have advantages and disadvantages.
It is therefore important to find out more and obtain comparative offers.
Occupational disability
Almost as important and, in my opinion, indispensable is occupational disability insurance *. The state has drastically restricted the provision in the event of disability so that you only get a mini pension that is barely enough to live on. In the case of occupational disability, there is no longer anything from the state and it is therefore very important that you take out this relatively cheap insurance in any case. This ensures that later when you can no longer carry out your job, you will receive a lifelong pension.
However, one should also compare here carefully, as there are some clauses, such as the “abstract right of referral”, which can cause problems later.
Life Insurance
When it comes to life insurance, a distinction is made between capital-forming life insurance * and term life insurance *. The former is more expensive because, in addition to financial security in the event of death, you also receive a payment of the sum insured if you are still alive after the life insurance has expired. That is why many also use capital-forming life insurance as a retirement provision.
Term life insurance, on the other hand, only aims to provide financial security for the surviving dependents in the event of death. If you don't die during the insurance period, you won't get any money back. But the contributions are also very low.
So if you want to make provisions for old age and have more money at your disposal, you should choose a capital-forming life insurance policy. Anyone who has little money as a start-up and only wants to cover the risk of their death for their relatives should choose term life insurance.
Private Liability
Anyone who causes damage to others is generally liable for an unlimited amount. That could be small things, like a broken window pane, but also major damage. And anyone who causes personal injury is really in a tight spot.
A private liability * is relatively cheap and ensures just in case one's existence.
Private Pension Provision
Many of my readers are still quite young and their old age is still so far away. But even as a young person you should keep in mind that at some point you will be old and you may not want to work for the rest of your life. This is where private pension provision * comes into play for the self-employed. You can continue to pay into the statutory pension, but that is relatively expensive and who knows what you can expect from the statutory pension in 30 years.
You shouldn't make the mistake of waiting for better times, to begin with. I know some self-employed people who did not want to bear the costs of retirement provision in their younger years and are now around 50. If you still want to take out a private pension plan, you pay more per month than you get out later in the month.
The rule here is that the younger you take out private retirement provision, the cheaper it is. And you shouldn't forget that 1,000 euros today will be worth significantly less in 30-40 years.
Optional Insurance
In addition to the above insurances, which in my opinion are necessary, there are plenty of other insurances.
You should think carefully about what is necessary for you and what is not. For some self-employed and entrepreneurs, certain types of insurance make more sense than others.
Corporate Liability Insurance
This insurance is less important for self-employed people online. But anyone who has a company and employees is liable for damage caused by the professional activity and the employees. Some professional groups even have to take out company liability insurance.
Legal Protection
If you have a lot to do with other companies and customers, you should think about legal protection insurance *. The risk of having to go to court or otherwise getting into legal conflicts is not exactly small in Germany. With legal protection insurance, you are well prepared for the legal fees.
Accident Insurance
Just like illnesses, younger founders, in particular, ignore the danger of getting into financial difficulties as a result of an accident. But accidents happen very often these days, and not just on the road. A lot happens at home, in leisure time and the office. Accident insurance * is recommended there.
Daily Hospital Benefit Insurance
I also have daily hospital benefits insurance *. This pays a daily amount after a selectable period as long as you are in the hospital. This is of course particularly interesting for the self-employed who offer services and where one's loss is synonymous with loss of income.
Daily Sickness Allowance Insurance
The daily sickness allowance insurance * is the alternative to the continued payment of wages for employees. You get an amount here every day if you are sick, even if you are not in the hospital. However, usually only from a certain day, so not immediately, as is the case with employees. This insurance is more expensive than daily hospital allowance insurance. The sooner you want to receive the daily sickness allowance, the more expensive it becomes. And working independently in the network is always when they are “only” so sick that they can stay at home.
Car Insurance
Anyone who travels a lot as a self-employed person naturally needs their car. An auto insurance * makes sense especially if you have a new car. So if you can't afford to be self-employed without a car and can't afford a new one in a hurry, you should consider car insurance.
Commercial Insurance
This is a very complex topic and includes many individual insurance policies. Depending on the industry and your situation, commercial insurance * can make sense, for example, to cover production losses or other things. Business liability is also one of the commercial insurances. Here you should seek advice from a professional so as not to end up being insured incorrectly.
Employer's liability Insurance Association
You can also get insurance through the employer's liability insurance association. Then you are covered against an accident at work. There is also injury benefit and, if the worst comes to the worst, even a pension. For “office workers” this is very cheap, but often not even necessary. In any case, I've since given notice.
Unemployment Insurance
I have already reported in detail on unemployment insurance here in the blog. In itself a good idea, but not so cheap anymore due to current changes in the law. Here everyone has to assess for themselves how great the risk of failure and unemployment is.
Further Insurance
In addition to the insurance mentioned, there are of course many more.
However, these are not so important for most start-ups and self-employed people. In individual cases, however, you should find out from one or the other insurance company which special insurances are available. This can make sense in individual cases.
As a rule, however, you can get along very well with the important insurance plus the desired optional insurance. As a self-employed person in the network without employees, this is usually sufficient.
Be Careful When Choosing Insurance
It is very important to be informed and to get several offers. Only with neutral information and comparison offers can you be sure that you will not be taken advantage of.
So please do not deal with the subject of insurance on the side and always read the fine print, even if it is not easy and does not take time.
I will soon be giving specific tips and information on selection and assessment for the most important insurance companies.
Conclusion
Many start-ups see insurance primarily as a cost factor. And of course, I understand that too, because at the beginning of self-employment you have to count on your money.
One should, however, think carefully about the negative consequences that illnesses, accidents, occupational disability, and other situations that are unfortunately part of life can have.
I recommend hedging against risks that threaten your existence.
So It Goes on
Part 13 of the series of articles Step by Step into Self-Employment on the Net is about “ costs ”. What costs are incurred by self-employed in the network and how do I include them, for example, in my price calculation.
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