How to limit the impact of incapacity for work

You can cover part of the loss of income due to incapacity for work with insurance. You use a living will to limit legal consequences.

How can you cope with loss of income?

lf you become ill or disabled, you may become unfit for work. You will then be unable to do some or all of your work. Temporarily or permanently.

Insurance provides you with income if you are unable to work. But this insurance does not pay out immediately if you become unfit for work. It may take a month before the insurance starts paying. Do you have the flu for a week? Then you will not receive any compensation.

You can insure yourself in different ways:

• Take out disability insurance (AOV) with a private insurer or an interest or professional organisation.
• Take out insurance with the UWV (Employee Insurance Agency, in Dutch).
• Join a group of entrepreneurs who help each other in case of incapacity for work, such as in a donation circle or with crowdsurance.

Costs of disability insurance

Not all entrepreneurs opt for disability insurance. The costs play a role in this. You pay an average of €200 to €300 gross per month for an AOV. The amount of the premium depends on profession, age and insured amount, among other things. A construction worker, for instance, runs more risk than an accountant and will spend more money on insurance.

AOV mandatory from 2030

An AOV is currently not mandatory for entrepreneurs. However, the government is working on legislation to make such insurance mandatory from 2030. The obligation will apply to self-employed people who file for income tax as entrepreneurs.

What can you do to keep your business going?

If you are absent due to an accident or illness, for example, your business could come to a standstill. You can prevent this by making someone authorised to sign for your business. You appoint an authorised person who can make decisions and sign contracts for your business. For example, your partner or a family member. Make proper arrangements in advance.

Draw up a living will

You can also limit the legal consequences of incapacity for work by drawing up a living will (called a levenstestament in Dutch). This ensures that the person you choose (an authorised person) makes decisions for your business if you are no longer able to do so yourself. Such a situation can arise, for example, due to brain damage.

In a living will you record in advance who will order new supplies on your behalf, for example, or pay your employees' salaries, and file VAT returns. If you do not do this, your colleagues will have to go to court to arrange such matters. That often takes months. In the meantime, your business is at a standstill, which can have major consequences.

A living will usually consists of 2 parts. A power of attorney for financial matters and a power of attorney for personal matters such as healthcare. You draw up such a will together with a civil-law notary. If you have a BV, you cannot always appoint an authorised person for your business. You can only do so if you own all the shares in your business.

What happens if you do not make any arrangements?

Have you made no arrangements and do you become ill? Then there is a risk that you will have to use up your savings before you are entitled to a benefit. If your partner has an income, you often cannot claim benefits.

If you and your partner have no income and no assets, you may be entitled to benefits such as social assistance (bijstand), IOAZ or WW. However, these benefits are subject to conditions.

If you do not have a living will and are no longer able to make decisions, someone else will have to arrange things for you. Someone close to you, like your partner or a colleague, can apply to the subdistrict court to appoint them or another person as administrator or trustee (curator).

Adjusting the registration with KVK

Because you have become unfit for work, you may need to adjust your business's registration in the KVK Business Register. As every situation is different, it is best to contact KVK about this.