Disability insurance for self-employed professionals
If you are a self-employed professional (zzp’er), you will not earn any money if you are unable to work due to illness or accident. To ensure you have an income even if you cannot work, you need to take out your own insurance. This is called disability insurance (Arbeidsongeschiktheidsverzekering, AOV). Read how this works.
Who is disability insurance (AOV) for?
- Disability insurance is for entrepreneurs who want to insure their income in case they fall ill or have an accident.
- You may then be (temporarily) unable to work and have less or no income.
- With an AOV, you take out cover for a specific amount that you can live on if you are unable to work. You agree this amount with your insurer in advance.
- This means you face fewer financial risks if you fall ill. An AOV usually also applies if you become partially incapacitated for work.
Disability insurance for zzp'ers
Many self-employed people are not, or not sufficiently, insured against disability. It is good to check what happens if you fall ill. As well as taking out AOV, you can also look at other options. Such as donation circles (see below).
Is AOV mandatory?
- Disability insurance is not currently mandatory for entrepreneurs.
- The government is working on legislation to make AOV mandatory. You will then be required to have disability insurance. The legislation is expected to come into force in 2030.
- Mandatory AOV will apply if you have profits from your business for income tax purposes.
- You will then be entitled to an invalidity benefit if you are no longer able to earn the minimum wage due to long-term illness.
- With mandatory AOV, all entrepreneurs will be insured. At present, entrepreneurs are sometimes unable to take out disability insurance, for example because they are excluded on the grounds of their age, medical condition, or medical history.
Read more about the plans for mandatory AOV.
What are the costs of an AOV?
The monthly premium for an AOV depends on a number of factors, such as:
- Your job. Do you have a high risk of physical or stress-related complaints?
- Your age. AOV premiums are often higher after a certain age.
- The own-risk period. This is the period in which you yourself compensate for your loss of income if you fall ill.
- The coverage you choose. You decide for yourself what you are and are not covered for. The more extensive the cover, the higher the premium.
Read more about the costs of an AOV with a calculation example here.
AOV and taxes
Disability insurance insures your personal income. So, the premium is not a business expense and is not deductible for your company.
The premium is, however, tax-deductible on your income tax return. You can claim the AOV premium as a deduction on your income tax return under ‘expenses for income provisions’.
Regular payments
You must pay income tax on the regular payments you receive if you are (partially) unable to work. In your tax return, you should declare these payments as ‘income from previous paid employment’.
If the AOV provides a benefit in a lump sum, you cannot deduct the premium paid. So the payment is not subject to income tax. The amount does count towards your assets in box 3.
Read more about disability insurance and taxes (in Dutch) on Belastingdienst.nl.
Other options for AOV
You can insure loss of income due to illness or accident in other ways as well. AOV is not yet mandatory so you decide how you want to insure yourself against disability. There are several options to choose from.
In some cases, you can take out ‘individual disability insurance on collective terms’. This is possible through various sector and professional organisations. Organisations that promote the interests of freelancers/self-employed professionals may also offer their members this option.
You can take out voluntary illness and disability insurance with UWV. You can take out this insurance if:
- you start your own business
- you had mandatory employee insurance through work or benefits less than 13 weeks ago
- you have difficulty finding disability insurance due to your medical history or for other reasons. In certain cases you can take out voluntary insurance with UWV.
The deductibility of the premium for the voluntary UWV insurance is the same as for an AOV that is not through UWV.
Some insurance companies offer private safety net insurance (in Dutch) for beginning zzp'ers. The condition for this insurance is that you cannot take out a normal AOV for medical reasons and you have been self-employed for less than 15 months. The rules for deducting the premium for the private safety net insurance from your income tax are equal to those of the AOV.
You can also cover loss of income due to illness or incapacity for work by joining forces with other entrepreneurs through crowdsurance or a donation circle.
- Participants agree to help each other financially in case of illness or disability.
- If you are ill, you receive financial contributions from other members to supplement your income.
- There is often a waiting period during which you will not get paid.
- Members of a donation circle often know each other. Crowdsurance participants do not know each other personally and are not required to attend meetings.
You can also choose to combine a donation circle and an AOV.
- The payments under the AOV will only start when gifts from the donation circle end. For example, with a 2-year own-risk period.
- If you become ill for a long period or are unable to work, you will receive benefits from the donation circle scheme for the first 2 years.
- After that, you will receive income from the AOV.
- The premium for the AOV is lower because of the long own-risk period under your AOV.
Check this table on kvk.nl for the differences between an AOV, donation circle, crowdsurance, and voluntary insurance with UWV.
Donation circles and taxes
The amounts you save each month in a donation circle are private capital. These are not a business expense and are not deductible for your company. These savings are included in your assets in box 3 of your income tax return.
The money you receive from a donation circle is made up of smaller gifts from the other members. You may receive a certain gift amount tax-free from each member per year. Higher than a maxium amount, you pay gift tax (schenkbelasting, in Dutch). Contributions you make to other members in your donation circle are also not deductible for income tax purposes.