Case Study: A Freelancer Builds a Full Coverage Stack

This is an illustrative scenario based on situations we commonly see. The names and details are fictional and are not based on any actual client. We’ve built it to show how a self-employed person with no benefits at all decides what to buy, in what order, and how a real budget forces trade-offs.

The short version: Maya, 41, a freelance designer in Hintonburg and the main earner for a family of four, had no disability, life, health or dental coverage. We built the stack in priority order, disability first, then term life, then a family health and dental plan, and deferred critical illness. Indicative total for the three layers she bought: roughly $390–$590 a month.

If you work for yourself and “group benefits” doesn’t apply to you, this is for you.

Maya’s situation

Maya is 41 and has run her own design practice as a sole proprietor for eight years, doing brand and UX work for clients across Ontario. Her net income after expenses has averaged about $88,000 over the last three years, with some months at zero and others well above average.

Her partner, Ben, 43, works part-time at a non-profit while handling most of the childcare, earning about $28,000 with no benefits. Their children are 9 and 6. They own a semi in Hintonburg with a $410,000 mortgage.

Their coverage before they came to us:

• No disability, life or critical illness insurance on either parent
• No health or dental plan; paying for prescriptions, dental checkups and Ben’s physiotherapy out of pocket
• About $22,000 in savings they consider their emergency fund, plus RRSPs
• Both healthy non-smokers; Ben has a history of back problems treated with physio

Maya’s trigger was a client who’d been off work for months after a cycling accident. “If that were me,” she said, “we’d lose the house.”

Why the order matters when you have nothing

An employee with a group plan is usually shopping for a top-up. A freelancer is building from bare ground, and buying in the wrong order can leave the biggest risk uncovered while money goes to the smaller ones. We ranked Maya’s risks by how likely each event was and how badly it would hurt.

Layer	Event covered	How likely over 20 years	Financial impact if uninsured	Priority
Disability	Illness or injury stops her working for months or years	The most common serious event	Loss of the household’s main income; no EI unless she’d opted in	1
Term life	Maya or Ben dies	Less common than disability	Mortgage, income replacement, childcare, education	2
Health and dental	Ongoing prescriptions, dental, paramedical	Certain; happening now	Steady out-of-pocket costs, plus exposure to a large drug bill	3
Critical illness	Diagnosis of cancer, heart attack, stroke or another covered condition	Meaningful	Overlaps with disability; adds a lump sum for costs and choices	4

This is the logic in our guide to disability insurance for the self-employed in Ontario: the income is the engine, so protect the engine first.

Layer 1: disability insurance

Maya had never opted in to EI special benefits for the self-employed, so there was no sickness benefit to fall back on. CPP Disability requires a severe and prolonged condition and pays a modest, taxable amount. Everything else would come from the $22,000 emergency fund, roughly three months of household expenses.

Disability insurers want proof of income, and for a sole proprietor that means tax returns, typically the last two years, using net income after expenses. Maya’s $88,000 average supported a monthly benefit around the 60–70% of income insurers commonly allow. Desk-based design work sits in a favourable occupation class, which helps on price.

We built the policy around the emergency fund. All figures are indicative monthly premiums for a healthy 41-year-old female non-smoker in a favourable occupation class and are illustrative; actual rates depend on health, income, insurer and the definitions chosen. These are not quotes.

Structure	Monthly benefit	Elimination period	Benefit period	Indicative monthly premium
Full protection	$4,500	60 days	To age 65	~$190–$270
Balanced	$4,000	90 days	To age 65	~$140–$200
Budget	$3,500	120 days	5 years	~$90–$135

She chose the balanced structure. The 90-day elimination period lines up with the three months her emergency fund can cover, and the benefit to age 65 protects against a permanent disability. The policy uses an own-occupation definition, so a condition preventing her from doing design work counts even if she could do other work, and a residual benefit that pays proportionately if she can only work reduced hours, which is how many freelancer claims play out. Our article on how disability insurance claims work explains what the insurer looks at.

Disability insurance benefits are generally tax-free when you pay the premiums personally with after-tax dollars, as here.

Layer 2: term life insurance

With income protected, we turned to what happens if Maya or Ben dies. Both matter: Maya’s death removes the main income, and Ben’s removes the childcare that lets Maya work full time.

Using the approach in our guide to how much life insurance you need, Maya’s need came to roughly $1.1 million (mortgage, ten years of income replacement, education), and Ben’s to roughly $500,000 (mortgage plus several years of childcare and household support). We rounded Maya to $1 million and Ben to $500,000, both on 20-year terms, running until the younger child is 26.

Indicative monthly premiums, healthy non-smokers, illustrative only, not quotes:

Coverage	Indicative monthly cost
Maya (41): $1,000,000 term life, 20-year term	~$55–$78
Ben (43): $500,000 term life, 20-year term	~$42–$60

Both term life policies are convertible to permanent coverage without new medical evidence up to the insurer’s age limit. Each named the other as primary beneficiary and a trustee for the children as contingent, since insurers generally can’t pay a minor directly. See life insurance cost at age 40 for how these amounts compare across ages.

Layer 3: health and dental

Disability and life insurance cover events that may never happen; a health and dental plan covers costs that are already happening. The previous year’s out-of-pocket spending (dental checkups and fillings for the kids, Ben’s physiotherapy, glasses for Maya, a few prescriptions) was meaningful but not enormous. What the plan really buys is protection against the costs they can’t predict: orthodontics, a new brand-name prescription, or an extended course of treatment.

Indicative monthly premiums for a family of four on individual plans in Ontario, illustrative only:

Plan tier	What it typically includes	Indicative monthly cost (family)
Basic	Percentage of drug costs to a modest maximum, basic dental, small paramedical allowance	~$140–$220
Mid	Higher drug and dental maximums, major dental after a waiting period, better paramedical	~$200–$320
Enhanced	Highest maximums, orthodontics, vision, broader paramedical	~$280–$420

They chose a mid-tier plan. Ben’s physiotherapy alone made the paramedical allowance worth having, and dental for two children is the benefit families use most. Both parents passed underwriting, so no guaranteed-acceptance product was needed. Our guide to health and dental insurance for the self-employed in Ontario covers what to look for at each tier.

One more point: generally, self-employed individuals can deduct private health services plan premiums as a business expense within limits set by the Income Tax Act, provided the plan qualifies. We told Maya to confirm the details with her accountant. Our article on private health services plans explains the rules.

Layer 4: critical illness, deferred

Critical illness insurance pays a tax-free lump sum on diagnosis of a covered condition after a survival period, commonly 30 days. For a freelancer it’s genuinely useful: a lump sum lets you stop taking clients during treatment and covers costs disability benefits don’t.

We quoted $100,000 on a 20-year term for Maya at an indicative $40–$70 a month. Added to the three layers already chosen, it pushed the total past what the family was ready to commit to. Because the disability policy would already replace her income during a serious illness, critical illness was the right layer to defer, with a review in a year. Our article on critical illness insurance for the self-employed makes the case for adding it when budget allows.

The stack and indicative cost

All figures are illustrative monthly premiums for healthy non-smokers aged 41 and 43; actual rates depend on age, health, income, insurer and the coverage chosen, and these are not quotes.

Layer	Indicative monthly cost
Maya’s disability: $4,000/month, 90-day elimination, to 65, own-occupation, residual benefit	~$140–$200
Maya’s term life: $1,000,000, 20 years	~$55–$78
Ben’s term life: $500,000, 20 years	~$42–$60
Family health and dental, mid tier	~$200–$320
Indicative total	~$437–$658
Less: approximate prior out-of-pocket health and dental spending now covered	–$50 to –$70
Net indicative change to monthly budget	~$390–$590

The three layers went to three different insurers: one that priced design occupations well for disability, one competitive on $1 million of term at 41, and one with a strong family health and dental plan. That’s the normal outcome of comparing 30+ companies.

What happened

Disability underwriting took about six weeks, because the insurer requested two years of tax returns and a financial questionnaire; Maya was approved at the full benefit. Both life policies came back at standard non-smoker rates. The health plan was in force within two weeks; Ben’s back history led to a review but no exclusion.

Maya also opted in to EI special benefits for the self-employed, a modest public layer under the private one. Our article on whether EI covers you if you can’t work explains how the opt-in works.

How to apply this to your own situation

Start with the layer that protects the income. For most freelancers, that’s disability: the most common serious event and the one with no public backstop unless you’ve opted in to EI.

Set the elimination period to your emergency fund. Three months of savings supports a 90-day wait. Less savings means a shorter wait and a higher premium, or building the fund first.

Get your tax returns in order. Disability insurers price on net income after expenses. If you’ve been aggressive with deductions, your insurable income is lower than your billings suggest.

Insure the lower earner too. Ben’s coverage was about childcare and household support, not salary. It still mattered.

Evaluate health and dental on what you already spend, plus what you can’t predict. It’s the one layer with a certain payoff.

Defer deliberately. Maya didn’t skip critical illness; she scheduled it. A written review date keeps a deferral from becoming a permanent gap.

For a scenario focused on the disability piece alone, see our self-employed disability insurance case study.

How Hayes can help

If you’re self-employed and starting from nothing, we’ll help you rank the layers, compare 30+ Canadian insurers for each one, and build a stack that fits your budget. Hayes Family Insurance has done this for Ottawa freelancers and business owners since 1996, and our advice costs you nothing because insurers pay us.

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