Sick as a freelancer without disability insurance: what are your options?

The bread fund: saving together for sickness

A bread fund is a group of a few dozen entrepreneurs who set money aside monthly in their own bread fund account. If a participant falls ill, the others gift that participant a monthly amount, usually for up to two years. The gifts are tax-free and your monthly contribution remains yours: if you leave, you take most of the accrued balance with you. The strength lies in the small scale and mutual trust; so does the limitation, because the payout is capped and stops after those two years. A bread fund is therefore mainly a solution for the first years of illness, not for permanent incapacity.

Voluntary insurance with the UWV

If you come from employment or benefits, you can voluntarily insure yourself with the UWV for sickness and long-term disability within thirteen weeks after it ends. The big advantage: the UWV has no medical examination, whereas private insurers can refuse or exclude you based on medical history. The premium depends on the income you insure. The thirteen-week deadline is hard: miss it and you cannot join later. If you are about to start freelancing from a job, put this at the top of your list, even if you are still unsure; you can always cancel later.

Your own buffer: the foundation under everything

Whichever route you choose, a financial buffer remains the foundation. Bread funds usually only pay out after a deductible period of a month, and with disability insurance you often choose a waiting period to lower the premium. You bridge that first period yourself. A buffer of three to six months of fixed costs brings peace of mind and also makes a longer waiting period affordable, which can substantially reduce the premium. Set aside a fixed amount monthly, in an account you do not use for day-to-day business.

What your buffer is not: a full alternative to insurance. Bridging a few months is feasible; years of incapacity cannot be financed out of pocket. See the buffer as the foundation on which a bread fund, UWV insurance or disability insurance is built.

Mandatory disability insurance is coming

A bill is on the table for a mandatory basic disability insurance for the self-employed, the BAZ. Under the plans, freelancers pay an income-dependent, deductible premium for a benefit at around minimum wage level in case of long-term incapacity. Those with equivalent or better private disability insurance could satisfy the obligation that way. The intended introduction is still years away and details may change, so do not wait for it: if you fall ill today, a future law does nothing for you. See it rather as a reason to sort out your current cover now.

How to weigh it up

Start with the question of how many months you can bridge without income and what needs to happen after that. For the short term, a buffer and a bread fund are a strong combination; for the real risk, years-long or permanent incapacity, disability insurance or the voluntary UWV insurance remains the only serious cover. Bear in mind that disability insurance premiums are fully deductible for income tax, making the net cost considerably lower than the gross premium. And whatever choice you make: make it consciously, and do not leave it on the 'someday' pile.