Disability insurance: all the ins and outs

As an entrepreneur or zzp’er (self-employed professional without staff, freelancer), you do not receive payment if you are incapacitated for work due to illness or an accident. This means your business makes less money. If you have disability insurance, you will receive a sum of money in such a situation. You can opt for a monthly payment or a lump sum. Whether or not you employ staff, a disability insurance is certainly worth considering for every entrepreneur.   

At the moment, you are not obliged to take out an AOV. This will change in 2027. Entrepreneurs will be required by law to take out disability insurance from then on. You can wait until then, but you would not be insured. Also, the required AOV will not pay you more than the legal minimum wage.

• Advantages of disability insurance
• Disadvantages of disability insurance
• How much does disability insurance cost?
• Different options
• Comparison: AOV and other options

Insurance adviser Norbert Bakker explains the options when choosing an AOV. 

Advantages of disability insurance

• When you are unable to work, you receive payments until a date chosen by you. For example, until your pension age. 
• If you fall ill, a re-integration coach will help you get back on your feet as soon as possible. 
• You can deduct the insurance premiums from your income tax return, in box 1.
• You can reduce the premium by not insuring your entire income, but only the minimal amount you need to survive. And you can increase the number of months you can tide over until the insurance payments begin (deductible).
• If you have a partner, they do not have to make up for the loss of income. Illness leads to worries and stress. Your partner is likely to have more work on their hands taking care of you and the household, and may not have any time left to work extra hours in their job or your company.

Disadvantages of disability insurance

• You do not accrue a buffer. If you never use the insurance, the premiums you have paid will be gone with nothing to show for them. 
• Medical advisers and insurance company experts determine whether or not you are incapacitated for work and due to receive payments. 
• You have to fill out a health statement. If you have a history of illness, you will pay a higher premium. Or your AOV will come with limitations. Also see the other options.

Did you know that mental issues, like a burnout, are the main cause of long-term illness? In most cases, your profession has nothing to do with it, says AOV expert Annemieke Postema. 

How much does disability insurance cost?

On average, zzp'ers spend 7% of their income on AOV premiums. You can deduct these premiums in your income tax return in box 1 (in Dutch). This means the net costs is 35 to 45% less. 

For example, you are a painter and you work 36 hours a week. Your gross year income is 50,000 euros, your deductible period is 2 months, and if you fall ill, you want to receive payments until your pension age. On average, you will pay: 

• gross premium per month: 350 euros
• net premium per month: 210 euros

Building up a buffer yourself is hard, says Annemieke Postema: “You should realise that you need a lot of money to bridge a number of months' illness. Say, you have a buffer of 35,000 euros. If your fixed costs and groceries run to 2,000 per month, you will be out of money in a year and a half.”

Other options

There are other ways of reducing your risk of income loss due to illness or accidents. For example: 

• A voluntary insurance with the Employee Insurance Agency UWV. Were you in paid employment less than 13 weeks ago? Then you can apply for a 'Ziektewetverzekering' or AOV at UWV. This is especially interesting for you if you have a history of illness, are ill, or have a high-risk profession: UWV cannot refuse your application. Banks and insurance companies can. Read more about the voluntary insirance with UWV (in Dutch). 
• A donation circle (called a broodfonds or schenkkring in Dutch) is a group of zzp'ers who know and trust each other. They form an association to support each other in case of illness. You can receive payments from a donation circle for up to 2 years. Read more about donation circles. 
• Crowdsurance is a type of insurance where a group of entrepreneurs supports each other through unexpected setbacks. You do not pay a premium, but give a sum of money to an entrepreneur who needs it at that moment. You can receive money from the others for a maximum of 2 years. Read more about crowdsurance. 

Comparison 

Compare the AOV, donation circle, crowdsurance, and voluntary insurance at UWV in this table. 

The 2023 Statistics Netherlands Zelfstandigen Enquête (zzp survey) shows that 35 per cent of entrepreneurs have made no provisions whatsoever for disability. However, 1 in 100 entrepreneurs becomes incpacitated for work long-term. Thirty per cent of zzp entrepreneurs say they cannot do without income for longer than 6 months. Do you want to discuss your situation with a KVK adviser? Call the KVK Advice Team.