Working With an Insurance Company for Freelancers

Becoming a freelancer can be a great decision for many workers out there. They may enjoy the freedom that goes along with becoming your own boss. But these self-employed individuals will need to find a way to secure their own insurance. Think about how you can find the right insurance package that can actually meet your needs or the needs of your family. This can be difficult, but it will be a lot easier if you can track down the right freelancers insurance company. Since self-employment is rapidly becoming a more popular option, this is encouraging these insurance companies to provide more insurance deals geared towards them.

First, you will need to think about what it means to buy these insurance deals out on the open market. Many people will wonder what they need to do to get coverage if they have any special conditions. It can be a little more challenging to secure this kind of offering, since some insurers typically prefer to provide packages through businesses. But you may want to think about the different ways that you can set up an insurance deal through a private market. You will be able to find the insurance package that meets your needs if you shop carefully enough.

There are quite a few different options for people who may be wondering what they need to do. This may be relatively simple if you just need to get an insurance deal for yourself. There are a number of private insurers on the market that will be ready to provide an insurance package to anyone like this. You may simply need to look online for some of the options that are available to you. Check out some of these quotes to determine what package features the price range that you want to get. You may be surprised to see that you can get better deals than you might have through your employer. This is one of the major benefits of shopping for your own health insurance package.

If you need a family based plan, it can become a little trickier to find the right health insurance package for yourself. You will need to make sure that your private insurer is ready to cover everyone in your family. This way you can get the support that you need to find if any of you comes down with a medical issue. These packages will also tend to cost a bit more money. Be prepared to talk with several different health insurers before you settle on one option or another. Many people can negotiate price structures when they buy family plans. There will be a freelancers insurance company waiting for you, but it may take some time to find them.

You may be glad to hear that you will have quite a bit more freedom when you buy your own health insurance plan as a freelancer. It will be up to you to decide which company suits your needs best and which one provides you with the best access to doctors. You won’t be restricted by the companies that your employer has chosen to offer to its employees. You can also decide what features you want to incorporate in to your next plan. Try to find a plan that can replicate what you may have had through your previous employer, if it worked well for you. You will want to make sure that your doctor is provided under this next plan as well.

Most freelancers will need to be aware that they won’t get support paying for their health insurance plan like they may have had before. A number of employers will pay for the premiums associated with the different health insurance plans that they provide. This won’t be available to the self-employed, so they will need to find a way to pay for it all out of pocket. Think about how you can find the best way to get a better deal on your health insurance package. There are a number of ways that you can find to cut costs on the monthly premiums that you pay. Fortunately, you will have a fair degree of flexibility when you work with a freelancers insurance company.

Don’t forget that you will be free to negotiate the rates that you want with this insurance company. If you were under an employer before, you would have been locked in to the packages that they offered to you. Think about how you might be able to negotiate the best deal that you want to get from your insurance plan. Some people will be interested in getting higher deductibles if it can lower the overall premiums that they tend to pay. This may be a great choice for you, so talk to your insurance company to see if it is possible. When you are self-employed and buy private health insurance packages, you will have these kinds of options available to you.

You might also need to keep an eye on some of the changes that will be coming with the Affordable Care Act. This is set to be enacted soon, so it may produce some considerable changes to the health insurance market. Since you will be buying private health insurance, you will want to stay updated on how this can affect you. It may allow you to buy new plans through the health insurance exchange system, which promises to provide cheaper overall plans to people. It may even allow you to find another freelancers insurance company that will be prepared to help you find the right plan for you or your family.

Ultimately, being self-employed provides you with the ultimate freedom to seek out the private plan that you may need. Some freelancers may be interested to learn that their health insurance costs are likely deductible on their tax returns. They can essentially apply these under business expenses, since they have to pay through their own pockets. Taking advantage of these kinds of details can be surprisingly important for the self-employed. They may need support like this if they are going to make it as an independent contractor.

Using Captive Insurance Companies for Savings

Small companies have been copying a method to control insurance costs and reduce taxes that used to be the domain of large businesses: setting up their own insurance companies to provide coverage when they think that outside insurers are charging too much.

Often, they are starting what is called a “captive insurance company” – an insurer founded to write coverage for the company, companies or founders.

Here’s how captive insurers work.

The parent business (your company) creates a captive so that it has a self-funded option for buying insurance, whereby the parent provides the reserves to back the policies. The captive then either retains that risk or pays re-insures to take it. The price for coverage is set by the parent business; reinsurance costs, if any, are a factor.

In the event of a loss, the business pays claims from its captive, or the re-insurer pays the captive.

Captives are overseen by corporate boards and, to keep costs low, are often based in places where there is favorable tax treatment and less onerous regulation – such as Bermuda and the Cayman Islands, or U.S states like Vermont and South Carolina.

Captives have become very popular risk financing tools that provide maximum flexibility to any risk financing program. And the additional possibility of adding several types of employee benefits is of further strategic value to the owners of captives.

While the employee benefit aspects have not emerged as quickly as had been predicted, there is little doubt that widespread use of captives for employee benefits is just a matter of time. While coverage’s like long term disability and term life insurance typically require Department of Labor approval, other benefit-related coverage’s such as medical stop loss can utilize a captive without the department’s approval.

Additionally, some mid-sized corporate owners also view a captive as an integral part of their asset protection and wealth accumulation plans. The opportunities offered by a captive play a critical role in the strategic planning of many corporations.

A captive insurance company would be an insurance subsidiary that is owned by its parent business (es). There are now nearly 5,000 captive insurers worldwide. Over 80 percent of Fortune 500 Companies take advantage of some sort of captive insurance company arrangement. Now small companies can also.

By sharing a large captive, participants are insured under group policies, which provide for insurance coverage that recognizes superior claims experience in the form of experience-rated refunds of premiums, and other profit-sharing options made available to the insured.

A true captive insurance arrangement is where a parent company or some companies in the same economic family (related parties), pay a subsidiary or another member of the family, established as a licensed type of insurance company, premiums that cover the parent company.

In theory, underwriting profits from the subsidiary are retained by the parent. Single-parent captives allow an organization to cover any risk they wish to fund, and generally eliminate the commission-price component from the premiums. Jurisdictions in the U.S. and in certain parts of the world have adopted a series of laws and regulations that allow small non-life companies, taxed under IRC Section 831(b), or as 831(b) companies.

Try Sharing

There are a number of significant advantages that may be obtained through sharing a large captive with other companies. The most important is that you can significantly decrease the cost of insurance through this arrangement.

The second advantage is that sharing a captive does not require any capital commitment and has very low policy fees. The policy application process is similar to that of any commercial insurance company, is relatively straightforward, and aside from an independent actuarial and underwriting review, bears no additional charges.

By sharing a captive, you only pay a pro rate fee to cover all general and administrative expenses. The cost for administration is very low per insured (historically under 60 basis points annually). By sharing a large captive, loans to its insureds (your company) can be legally made. So you can make a tax deductible contribution, and then take back money tax free. Sharing a large captive requires little or no maintenance by the insured and can be implemented in a fraction of the time required for stand alone captives.

If done correctly, sharing a large captive can yield a small company significant tax and cost savings.

If done incorrectly, the results can be disastrous.

Buyer Beware

Stand alone captives are also likely to draw IRS attention. Another advantage of sharing a captive is that IRS problems are less likely if that path is followed, and they can be entirely eliminated as even a possibility by following the technique of renting a captive, which would involve no ownership interest in the captive on the part of the insured.

Do Larger Insurance Companies Offer Cheaper Insurance Rates?

A big question that many insurance consumers ask is, “Do larger insurance companies offer cheaper insurance rates?” Let me answer this question by saying that just because the larger insurance companies may do business in multiple states, this doesn’t mean their share of the market is bigger, nor does it mean they can write lower premium policies for everyone in every state.

The amount of insurance that each company writes may vary from state to state based on their experience in that particular state, or even in a certain region of a state. Insurance consumers should also be aware that there may be smaller regional insurance companies that offer the same coverage at a lower rate. Although the regional companies may not be as big as the larger insurance companies, they still may be competitive and financially sound. Bigger is not always better. In my experience as an independent insurance agent, I have discovered that savings were available to some customers by writing the customer’s insurance with a smaller regional company.

I would suggest that people who are looking for the lowest insurance rates consider requesting insurance quotes from the smaller regional companies, as well as a larger national company. Most smaller regional insurance companies do business through local independent agents. In order to request quotes from smaller companies, you will most likely have to use a local independent agent.

If using a smaller company is a concern, then I would also suggest that you request from the writing insurance agent the companies their AM Best rating and financial information. The AM Best rating can be a handy tool for consumers.

The A.M. Best Company is an independent, full-service credit rating organization. They assign a rating for each insurance company based on the insurance company’s financial strength. Based on the outcome, a company will receive a rating of Superior (A++, A+), Excellent (A, A-), or Good (B++, B+). Per AM Best, companies with a rating between A++ – B+ are considered to be financially secure. Other ratings include Fair (B, B-), Marginal (C++, C+), Poor (D), Under Regulatory Supervision (E), In Liquidation (F) and Suspended (S). According to AM Best, companies with a rating between B – S are considered to be financially vulnerable.

By comparing multiple insurance quotes from both large and smaller regional companies who have B+ or better rating, consumers should be able to feel secure in finding the cheapest insurance rate.