Common misunderstandings about disability insurance

The KVK Advice Team interviewed entrepreneurs and found that there are many misunderstandings about disability insurance (AOV). Doctor Annemieke Postema conducts medical examinations for the AOV. She regularly encounters the 5 misunderstandings described in this article. She makes clear why it is wise to arrange disability insurance in case you are unable to work due to illness or an accident. 

The KVK Advice Team interviewed entrepreneurs and found that there are many misunderstandings about disability insurance (AOV). Doctor Annemieke Postema conducts medical examinations for the AOV. She regularly encounters the 5 misunderstandings described in this article. She makes clear why it is wise to arrange disability insurance in case you are unable to work due to illness or an accident. 

1. AOV insurance is too expensive

On average, entrepreneurs pay 7% of their business income in AOV premiums. You can deduct this premium in box 1 of your tax return (in Dutch). This means you pay a net sum of 35 to 45% less.

Example

You are a painter and you work 36 hours per week. Your gross annual income is €50,000. Your own-risk period is 2 months and you want sickness benefits until your retirement age. Then you pay on average:

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

When calculating your hourly rate, include the premium of your AOV insurance.

2. Insurance is not necessary; I do not have a dangerous profession

Research by Statistics Netherlands (in Dutch) found that psychological complaints, such as burnout, are the biggest cause of long-term illness. “Your profession has nothing to do with it in most cases," says Postema.

3. An AOV is not necessary, I save for a financial buffer in case of illness myself

"Realise that you need to have a decent buffer to cover several months of illness. Suppose you have a buffer of €35,000. If your fixed expenses and groceries are €2,000 a month, your buffer will be gone after a year and a half."

4. There will be a mandatory AOV so I don't have to arrange anything myself

The mandatory AOV was originally going to take effect in 2024. Due to the reaction of various parties to the plans, this is no longer the case. The new system will not be introduced before 2027. Until then, you are not insured if you have not arranged anything yourself. In addition, the compulsory AOV will not pay out more than the minimum wage.

5. If I get sick, my partner will work more

"Being sick often causes a lot of worry and stress. Your partner will probably already be taking on more care and household tasks, leaving them no extra time to work more hours or put extra energy into your business," says Postema. 

There are also alternatives to an AOV. Consider a donation circle, crowdsurance, or UWV insurance. Read more about the different options.

Video: Managing business risks