If I’m off-sick who’s taking care of my Business?
Author: Susana Dias
(article published in Canarian Weekly 16th October 2009)
Let’s imagine for a moment that you are the chef of your own restaurant: can you afford to stay home when you’re ill? Having an accident at work or even an illness can bring serious economical consequences for you, your family and your business. Find out in this article how the right professional insurance can save the wealth of your family and the health of your business while you’re taking care of your own health.
One of the first steps of becoming a self employed worker is registering within the Spanish Social Security System. You will then be liable for fixed monthly payments, which must be paid even if you have zero income. You will receive a temporary card which shows your social security number. You should take this card to your local social security clinic and register with a doctor. This will instigate your permanent health card. In Spain there are various levels of social security payable, depending on the amount of pension you wish to receive on retirement. Most self employed workers under 49 years old choose the minimum (currently 221€ without temporary disability or 248€ with) because only when you are over the age of 50 does it start to affect the amount of pension you will receive. At each level you have the choice of paying an additional amount for IT (temporary incapacity sickness) benefit in the unfortunate event of you falling ill. You can change the option to pay IT if you wish, but this must be done prior to the 1st October of each year. Those persons over the age of 50 have a slightly different payment structure and workers over the age of 65 do not have to make any social security payments except for the optional IT payments, although they can opt to continue paying if they wish.
But what happens if you have sick leave or you have an accident at work? The minimum level only entitles you to a small financial assistance, insufficient to maintain your quality of life. So to compensate the Social Security economical assistance, Insurance Companies offer a special insurance called “temporary disability insurance” or “daily income insurance for self employed workers” that will insure you a certain amount for everyday that that you can’t work due to sickness or work accident.
The Real Example
Check the case of my client and good friend J.R. - a 35 years old, Irish, commercial agent for a food and beverage company in Tenerife. He’s self employed and declares the minimum 818€, so he’s paying a Social Security fee of approximately 248€ a month. If he’s off sick what he will receive from Social Security (490€ for the first month and 613€ on the following) are only pennies compared with the 1.800€ that he normally brings home every month. He is the classical example of someone who needs a “temporary disability insurance” to assure that in case of an unexpected sickness or accident he still receives sufficient money to pay the mortgage, the car, school fees, supermarket bills and even to hire someone to substitute him with the F&B deliveries while he’s recovering. J.R. came to our office and we advised him to contract a DKV Renta: the yearly premium of 355,32€ insures him 60€/day of illness benefit during two years, and if he’s hospitalized he will receive an extra benefit of 15€, a total of 75€ a day, as well as the Social Security financial assistance! J.R. was off sick during three months and he received a total of 5.400€ of illness benefit from the Insurance Company, that allowed him to hire someone to replace him, to oversee the deliveries and keep the business running and making profit, until he could return
! Some “temporary disability insurance” policies, like DKV Renta, a part of the daily sickness benefit can also include a daily hospital benefit for inpatient treatment due to illness and / or accident and /or a single payment according to surgical treatments. Also it is possible to choose between insurance cover for either sickness or accident or for both, whatever suits your needs and your pocket.
If you are shopping around for those sorts of policies remember to compare the following aspects:
1. Most policies fix a maximum period of indemnization: “Sanitas-Bupa” limits the daily sickness benefit period to one year, most Insurance Companies to 18 months and “DKV” and “Previsora General” have the higher limits with two years.
2. Some pathologies have they own limits: Hospitalization due to psychic illness have a limit of 90 days in “Prevision Mallorquina”, 20 days in “Mapfre“ and “Sanitas-Bupa” and 10 days in “DKV”.
3. Maternity Leave is important: the total indemnizacion for pregnancy, birth and maternity leave is excluded from “Agrupacion Mutua”, restricted to 20 days in “Vitalicio”, and to 45 days in “DKV”.
4. Exclusions: all policies exclude mental or nervous pathologies and direct consequences like stress, anxiety or mental depression. They also exclude any pre existing illness.
5. Qualifying periods: All “temporary disability insurance” have a qualifying periods of some months: if you are off sick the day after hiring the insurance, you won´t receive the daily benefit! Depending on the Insurance Company qualifying periods can be two or three months and usually they are absolved in case of an accident or if you are a highly trained self employed worker like a Doctor, Solicitor, Architect and Executive. “Mapfre”, “Sanitas-Bupa” and “DKV” have a qualifying period of 3 months while “Vitalicio Seguros” is two months.
6. Bigger the risk, Higher the Premium: All insurance companies consider different categories of workers according to the risk of accidents at work: (workers with manual and machinery activity have a higher probability to suffer an accident at work). Even some professions are considered dangerous and have a higher premium than others. Professions like pyrotechnics or miners will not be insured by most Insurance Companies. The premium will also be affected by the age and gender of the insured person. In case you change your work conditions (start travelling more, for instance) you should communicate the increase of risk to your agent.
Our advice:
1 - If you have time, ask for a budget in different insurance companies and compare the different exclusions, qualifying periods and available endorsements. Remember not always the cheapest insurance will be the best: normally “lower premium equals a higher number of exclusions”.
2 - In case you need to lower the premium to suit your pocket, the best way is to put up the excess but not to lower the maximum period insured. Probably it will be easier to sustain the losses of short term sick leave, rather than incur a situation of a couple of months without coverage because you didn’t hire a policy with an extended coverage.
3 – Choose an insurance agency that offers the best of two worlds: an English native team with a full Spanish Insurance and Financial understanding of the law.
Contact the Author for more information or any doubt you might have