What you need to know about insurance if you're a freelancer

Working for yourself offers many advantages but it doesn’t offer dental

Working for yourself offers many advantages but it doesn’t offer dental

(Getty Images/iStockphoto)

Let's talk insurance. Wait, wait, we know, no one wants to talk insurance but it's key if you're a freelancer. Freelance offers many advantages but it doesn't offer dental.

With side-hustles, precarious employment and freelance becoming more common, workers are turning to other forms of insurance to supplement universal health care.

If you are a freelancer with financial obligations like a mortgage or rent, or you have a family, or you have a prescription, then insurance can be a cheaper option than paying out of pocket. If you are considering leaving a job to go freelance, the general rule of thumb is to take care of all your needs while you still have coverage. If you're going to lose your group coverage, there are some plans that, if you sign up within 60 days of the job loss, will continue to cover your prescription. If you're young, healthy, have no dependents or major financial obligations, you may not need to buy extended insurance as the out-of-pocket costs can be cheaper than the insurance premiums. The Universities of Toronto and Saskatchewan, for example, both have a dental clinic where you can get treatment from a dental student at a reasonable cost.

Every single person's situation is different and they should talk to an insurance agent they trust because, let's face it, insurance can get complicated. With that in mind, here's an overview of the different types of insurance you may want to consider.

Life insurance

This is the most common one when people think of insurance, but if you don't have dependents, it may not be the best option. Life insurance should be considered if you have a partner and children so they are taken care of should anything happen. So what other types of insurance are out there that might be useful when you're freelancing?


Disability insurance

According to the Canadian Life and Health Insurance Association, one in three Canadians will suffer a disability that may prevent them from working. "Everyone should have individual disability insurance as early as possible," says David Lipkus, a financial security advisor. Having this type of insurance means you'll still have income if you're unable to work due to a disability.

Freelancers don't get sick days - if you don't work, you don't get paid. Disability insurance can replace up to 85 per cent of your income but the downside is, it is not cheap, even if you're healthy, have no prior conditions and don't smoke. You can expect to pay a monthly premium of over $100 and up depending on your age and income. You can buy disability insurance from individual insurance plans or group insurance plans through a union or association.

Critical illness insurance

Critical illness is more important for people who do not have a life partner to provide financial support if they become ill, says Lipkus. You might be wondering what's the difference between critical care and disability insurance. After all, they sound the same so you might only need one. Critical illness insurance will pay out a lump sum, while disability insurance will protect your income until you're 65.

It's not as expensive as disability insurance, most people will pay a monthly premium of less than $100, but like all forms of insurance, the more that's covered, the higher your premium. You can be covered for the big ones like heart attacks, stroke and cancer but for a few dollars more per month, you can be covered for 20-something illnesses too.

Extended health care

We talked about whether you need extended health care so if you do need it, there are tons of options that will cover dental, eye care, prescriptions, ambulance rides, dispensary fees, massages and chiropractic sessions. Insurance companies have multiple private options that you can customize according to your needs. 

There is also the group option offered through alumni, banks, professional organizations and some provinces like Alberta which offers non-group coverage. You may have received an email or two from your school or professional organizations encouraging you to sign up for insurance. You'll get coverage but you'll pay the full cost unlike employer plans, which cover part of the premium and costs. That can add up.

"I joined the freelancers union in the hopes of affordable insurance. It's a group rate that's still $350 a month for anything worthwhile," says Kat Armstrong, a Toronto-based freelance writer who chose not to get the insurance. She and her partner Matt have three young children and they need the dental coverage. Matt has insurance through his job, which costs $50 a month, which for Armstrong, made more financial sense than the alumni insurance premium.

That's to be expected, says Lipkus, who says that alumni and professional associations coverage and premiums can change at any time, and association prices can increase every five years. Armstrong doesn't plan on renewing her membership in 2018. "I literally only signed up to get 'great rates on insurance'". While it didn't work for Armstrong, alumni and professional insurance is available through most universities, universities and professional organizations.

So how much insurance do you need? It comes down to what you need to run your freelance business but you can get an idea of the cost via websites like Kanetix.ca and the Ombudservice for Life and Health Insurance which has a list of insurance providers in one place. It might seem like another expense but it's useful should you need it. "Precarious income can be a factor in pricing and type of coverage, but not having insurance when you need it can be financially devastating," says Lipkus.