Self-employed and sick: Which insurance has you covered?

As a self-employed person, you’re your own boss. But along with the freedom and flexibility come certain responsibilities, especially where your health is concerned. What happens if you get sick?

Although being self-employed has a lot of advantages, it also has its challenges. One of the biggest is securing your income and making arrangements for your healthcare. Unlike when you’re employed by a company, if you become sick while self-employed there’s no employer to take care of your accident insurance or daily sickness benefits.

Since sickness and injuries usually arrive unplanned, they generally compromise your ability to work and earn an income. Without the right coverage, you could face cashflow problems and uncertainties that put your independence and livelihood at risk. Daily sickness benefits insurance is just one of many additional options available for the self-employed and business owners.

Highlights of daily sickness benefits insurance

It happens to everyone at some point or other – you get so sick you aren’t able to work. Whether you have the flu, a simple cold or serious injuries that make it physically impossible for you to do your job, when you work for someone else it’s not a problem: You keep earning your salary while you take time off to rest and get better. But if you’re self-employed, it’s a completely different story.

If you’re sick for quite a while, you won’t be earning any income during that time. Beyond regular health insurance, there are no additional benefits. But there is something you can do. Daily sickness benefits insurance is an important type of coverage that is highly recommended for anyone who is self-employed in Switzerland. It provides substantial protection for your financial security during those times when you are sick. Which means you don’t have to worry about defaulting on payments.

something that could affect both your business and your personal life. If you are no longer able to pay your suppliers or business partners, you risk losing your long-time customers as well as your credibility. This will hurt your business in the long run – not just while you’re sick. On top of this, you have both regular personal and company expenses that need to be paid. You have to pay rent on both your apartment and your office, store or workshop – even if you aren’t making any sales at the moment and can't accept any orders.

Daily sickness benefits insurance is a type of income insurance. It pays out a regular income while you’re sick or unable to work and therefore unable to earn an income. 

Advantages of daily sickness benefits insurance

1. Security for the self-employed: In contrast to employees, as a self-employed person you normally are not entitled to sick pay from your employer because, strictly speaking, you have no employer. Daily sickness benefits insurance fills this gap and ensures that self-employed persons continue to receive an income if they are unable to work.
   Let’s assume it’s just you and you have no employees. If you come down with a really bad cold and can’t work for a while until you are better again, you won’t be earning any money because there is no one else to do the work. This means when you’re sick, not only is it a drain on your health, it’s also a financial strain on your company. That’s where daily sickness benefits insurance comes in: It covers your financial needs, which gives you room to breathe so you can concentrate on getting better.
2. Flexible benefit period: Another feature of daily sickness benefits insurance is the flexibility it offers in terms of the benefits period. Depending on your insurance policy, daily sickness benefits can be paid out for a specific time period of up to a maximum of 720 days. The exact amount will be agreed in your policy.
   This is especially important for instances when you as the employer are affected by the absence of an employee, but, due to data protection laws, you don’t know the medical reason for their sick leave. Consequently, you don’t know how long they will be out. This is where a flexible benefit period can provide some welcome relief.
3. Get help quick if something goes really wrong: Daily sickness benefits insurance can be paid out relatively quickly, as soon as the inability to work is confirmed by a medical doctor. The determining factor is the waiting period agreed in your policy, which can be between two and 60 days. If you want to ensure that help arrives quickly, then choose a short waiting period. 
4. Flexible premium amount: The premium amount largely depends on two factors: the amount of the daily sickness benefits and the waiting period. The waiting period is the time in which you as the insured person are unable to work due to sickness before daily sickness benefits are paid out. It determines the date payments should start.
   As regards the waiting period, you can decide whether you would like help to come quickly in case of sickness or whether you’d prefer to wait a little longer in order to pay a lower premium. If, as a self-employed person, you have a large enough financial cushion, it’s worth choosing a longer waiting period so you can save on your premiums. If times are tough or you don’t have any cushion, then the waiting period should not be too long because otherwise you could end up in financial difficulties.

Self-employed with staff: The advantages of group daily sickness benefits insurance

If you are not a self-employed freelancer, or maybe even have employees working for you, then daily sickness benefits are something you should seriously consider if you haven’t already. Art. 324a of the Swiss Code of Obligations provides for what is known as the obligation to continue paying salary. This means that you must continue to pay the salary of employees who are sick or absent. The exact conditions depend on regional practices, years of service and other such factors. Even during the first years of service, employees are generally entitled to three weeks of continued salary payments.

This could amount to a considerable financial risk for you as a business owner, especially if you have a larger number of employees. This is why in many cases it’s worth having group daily sickness benefits insurance, which covers precisely this risk as well as all agreed-upon costs when your employees become sick. 

Of course, you can also be employed by the company you own – which means you can benefit from the group insurance as well.

Healthcare and preventive measures

If you are self-employed, it’s extremely important to be proactive and take measures to remain healthy and productive over the long-term. Of course, this is also true if you have employees and are in charge of corporate health management at your company. This concerns the health and performance of your employees and involves initiatives such as ergonomic workspaces, sports programs or healthy meal options. 

In addition to the physical aspects, work atmosphere also contributes to the health of your staff. Are there a lot of conflicts at your workplace? Do staff work a lot of overtime? Is there a culture of open communication so that even difficult issues can be discussed? All of these questions are relevant if you intend to reduce the number of days your employees are out sick. You as the business owner must also maintain a healthy work-life balance so you don’t wear yourself down juggling both your personal and professional life. If you don’t strike the correct balance, over the long term your health will suffer and then so will your business.

Sick and self-employed – key questions

What happens if I am unable to work?

If you are unable to work, you should first go to a medical doctor in order to have your condition documented. Next you should inform your daily sickness benefits insurance and file your claim. The insurance will pay out the daily sickness benefits you have agreed to partly offset your loss of income.

As a self-employed person, how am I insured when I become pregnant?

Pregnancy is an exciting and intense phase for every mother-to-be. That makes it all the more important during these challenging times to be financially protected – particularly if you are self-employed.

In Switzerland, maternity benefits are mandatory. They amount to 80% of your income. If you are self-employed, you are also entitled to maternity benefits. But they are calculated differently from those for permanent employees, which often results in a nasty surprise. Your net income, i.e. your income after deducting all items for operating expenses, is used as the basis for calculation. This is a considerably lower figure because when you’re self-employed, you want to deduct as much of your expenses as operating costs as you can from your taxes. Normally, this leaves you with more money. But in terms of maternity benefits, this tax practice becomes a clear disadvantage. 

On top of this, it’s likely that in the last months and weeks of your pregnancy, you will no longer be able to work full time. Perhaps you aren’t capable of working as hard as before or maybe you need to take a day off here and there. This is absolutely normal, and if you were an employee, it would not impact your salary at all. But when you’re self-employed, it can be a real problem because if you work less while you’re pregnant, then you’ll likely also earn less. And this too reduces the amount of maternity benefits you’ll receive.

If you want to have a baby while you’re self-employed, you should look into how both of these aspects will impact your maternity benefits and prepare your finances accordingly. Otherwise you will be expecting more benefits than you’ll actually receive – adding another source of stress you could definitely do without while you’re pregnant.

Are daily sickness benefits also paid out for inability to work due to a psychological illness?

Yes, psychological disorders can also lead to an inability to work and so are taken into consideration by insurers. As with all other diagnoses, it is important that you have a confirmation of your condition from a medical doctor.