Four in ten self-employed people in the Netherlands work without it disability insurance (AOV). For most of them, this is not a fundamental consideration, but a financial one. An AOV for self-employed persons and SMEs is by no means cheap. Especially if you are only partially dependent on the income from your own company, or if you do not earn that much because you have just started, for example, an extra expenditure of several hundred euros per month is no side issue. You think twice before you take out expensive insurance, which you often have to keep for years.
However, since the government plans to make an AOV compulsory for entrepreneurs, it is a recurring question for many entrepreneurs: should I take out an AOV in advance of that obligation? Or is it better to wait? And what options are there?
What does an AOV entail for entrepreneurs?
Basically, an AOV does exactly what its name suggests: providing an income in the event of (temporary) incapacity for work. However, the AOV for entrepreneurs goes a bit further than that in all cases.
With most insurers you have extensive options about how you want to organize your AOV. You can then choose, for example, what percentage of your regular income you want to be paid in the event of incapacity for work, the maximum number of months you want to receive that benefit, et cetera. With flexible insurers you can therefore determine a lot of details of your AOV yourself. There are many differences between insurers, so before you arrange anything at all, you should always check the different providers of such Compare AOV.
Most AOVs also offer a lot of extras, such as preventive medical check-ups (to prevent incapacity for work) and advisory processes in the event of incapacity for work so that you can return to work as quickly as possible. In this way you are professionally supported by medical experts and you are not alone in case of illness. An AOV is therefore more than just a pot of money that is opened.
AOV, buffer or bread fund?
Such an extensive package may cost a bit. You don't have an AOV for a few tens. Depending on your wishes and your field, you pay more than a hundred to in some cases hundreds of euros per month. That is dearly paid if you never use it. That is why there are also alternatives.
A popular alternative is a bread fund. This is a fund in which colleagues make a monthly contribution. This pot is tapped as soon as one of the participants in the bread fund becomes incapacitated for work. The costs with a bread fund are often lower than with an AOV. A bread fund only provides financial support; there are no medical experts on hand and you cannot put together a comprehensive support package. However, you can often simply stop your participation in a bread fund and also get part of your investment back, where you often take out an AOV for a longer period of time.
Some entrepreneurs also choose to build up a buffer themselves for worse times. That is of course the cheapest option, but in order to bridge long-term incapacity for work, you will have to set aside a reasonable amount of money. Not every entrepreneur is capable of this.
Not mandatory, but still arrange something?
As said is the government intentions make an AOV mandatory for entrepreneurs. The background to this idea is that it is undesirable to employ uninsured entrepreneurs. The aim is to prevent the Dutch from losing their income due to illness, having to claim benefits such as social assistance, or even ending up in poverty. A noble endeavor, you would say.
Nevertheless, not every entrepreneur is waiting for such an obligation. This is mainly due to the costs: an AOV is expensive. In addition, many freelancers are not at all interested in such insurance because they have a paid job in addition to their work as a self-employed person.
An AOV (or participation in a bread fund) is therefore especially recommended if you well depend on your income as an entrepreneur. A common fallacy is that such insurance is only interesting for entrepreneurs who do physically demanding work, such as construction workers. The truth is that disability can happen to anyone and can come in all kinds of forms. Think of a traffic accident or mental problem. When it comes to your income and therefore your entire life, you want a bit of security.
Act now or wait?
Not all details of the AOV obligation are known yet. Is it wise to act now?
If you meet the above description, then: yes. It may take years before the obligation is finalized and takes effect, and years of uninsured walking around while you need your income as an entrepreneur to pay your mortgage and make a living, that is irresponsible.
If that is not the case, it may pay to be patient. It is expected that insurance premiums will decrease in the near future, as a result of the approaching AOV obligation from the government. The insurance imposed by the government will not go through insurers, but through the UWV and the tax authorities. There is therefore a good chance that the enormous premiums that entrepreneurs sometimes have to deal with will soon be a thing of the past.