Mandatory disability insurance for the self-employed: is the standard policy the right choice?

Mandatory disability insurance for self-employed entrepreneurs is moving closer to reality. The proposed Basic Disability Insurance Scheme for the Self-Employed (BAZ) has now reached an important next stage in the legislative process and is expected to be introduced in the coming years. For many entrepreneurs, this raises several questions. What exactly does the mandatory disability insurance involve? What does it mean for your current situation? And is the UWV's basic insurance scheme really the best solution for your business? In this article, we outline the key developments.

Why is mandatory disability insurance being introduced?
At present, only a limited number of self-employed entrepreneurs have disability insurance in place. For many, the premium costs are a reason to bear the risk of disability themselves.

The Dutch government believes it is important that self-employed individuals, like employees, have a financial safety net when they are unable to work for an extended period. By introducing the Basic Disability Insurance Scheme for the Self-Employed, the government aims to prevent entrepreneurs from losing their income due to long-term illness or an accident.

What will the Basic Disability Insurance scheme look like?
Although the final legislation has yet to be approved, the main outlines are now known. The mandatory basic scheme is expected to be administered by the UWV (Employee Insurance Agency) and will likely apply to all entrepreneurs who pay income tax as self-employed individuals.

Less freedom of choice for entrepreneurs
While the basic scheme provides a safety net, it also comes with limitations. Entrepreneurs who do not have their own disability insurance policy will automatically be included in the UWV scheme. As a result, they will have less influence over the terms and conditions of their coverage. For example, you will not be able to freely choose:

• a higher benefit amount;
• a shorter waiting period;
• a different premium structure;
• additional coverages tailored to your personal circumstances.

As a result, the standard coverage may not adequately reflect your income, fixed expenses, and financial obligations.

Why it may be wise to review your disability insurance now
Although the mandatory scheme is not expected to be introduced until around 2030, it may be beneficial to explore your options now. Entrepreneurs who already have a private disability insurance policy before the official reference date may be able to take advantage of transitional arrangements. Under certain conditions, an existing policy could potentially be accepted as an alternative to participation in the mandatory scheme. In addition, arranging your own policy provides greater flexibility. You can choose the level of coverage that best fits your profession, income, and financial situation.

What happens if you do nothing?
If you do not arrange your own disability insurance, you will eventually be enrolled automatically in the mandatory scheme once it comes into force. Although it may still be possible to switch to a private disability insurance policy later, the available options could be more limited. Future acceptance criteria and regulations may also prove less favourable than the opportunities available today. By reviewing your situation in a timely manner, you retain control over your income protection and avoid being tied to standard conditions that may not match your personal needs and preferences.

A disability insurance policy tailored to your situation
No two entrepreneurs are the same. A self-employed construction worker faces different risks than a consultant, physiotherapist, or IT specialist. That is why a tailored solution is important. With a private disability insurance policy, you can decide for yourself:

• the amount of income you wish to insure;
• the length of the waiting period;
• the retirement age until which you want coverage;
• any additional coverages you may require.

This allows you to create a solution that matches both your personal circumstances and your financial obligations.