Security for entrepreneurship
An entrepreneur's professional skills include identifying, accepting, and preparing for risks related to business operations.
Unpredictable things can and do happen in your own life too. It's a good idea to be prepared and prepared for these risks as well.
YEL insurance, based on the Entrepreneur's Pension Act, is the only mandatory insurance for entrepreneurs. With YEL insurance, you insure yourself against old age, disability and death. The insurance also includes a survivor's pension, which provides security for the entrepreneur's relatives.
As an employer, your company must take out employer insurance, such as statutory accident insurance and employee pension insurance. In addition to these, there are industry-specific mandatory insurances and voluntary insurances.
Entrepreneur's social security
As an entrepreneur, you have access to the same income security benefits as an employee in situations where they are unable to secure their livelihood through their work.
The aim of income security benefits is to provide financial security in life situations where income is significantly reduced or completely lost, usually for reasons beyond the person's control. However, since working as an entrepreneur differs significantly from working as an employee, there are differences in the conditions for receiving benefits.
The basis for an entrepreneur's statutory income security is the annual income from work, or so-called YEL income, which is determined when taking out an entrepreneur's pension insurance. Income from work must reflect your work as an entrepreneur. In addition to the fact that YEL income determines the amount of your pension insurance contributions and how much pension you accumulate, it also largely determines the level of all your other statutory social security.
You only finance your pension benefits with the self-employed person's pension insurance contribution. In addition, you pay the health insurance earned income insurance contribution based on your YEL income and the employer's social security contribution based on your potential salary income, which finance benefits under the Health Insurance Act, such as sickness allowance, parental allowance, and rehabilitation allowance.
Through taxation, you contribute to the financing of both basic security and the so-called last resort income security, which include, for example, basic unemployment benefits, minimum daily allowances, housing allowance, student allowance, income support, and certain family benefits. As an entrepreneur, you therefore contribute quite significantly to the financing of both your own and joint income security benefits.
As an entrepreneur, it is very important for you to be aware of the social risks related to your own life situation and the impact of your YEL income on your livelihood in risky situations. For example, if you insure yourself according to the minimum YEL income, you will not benefit much from your earnings-related pension insurance, but instead of the old-age and disability pensions under the earnings-related pension laws, you will more likely receive pensions under the national pension and guarantee pension systems. In principle, these are also received by people who do not work at all. You will also never receive a benefit greater than the minimum daily allowance if you fall ill or go on parental leave. If you become unemployed, you will rely on labor market support.
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