Which insurances are mandatory for an entrepreneur?
Becoming self-employed means learning a lot of new things — such as figuring out which insurances you need to take out. Find out below which insurances are mandatory for you and which ones you can take out voluntarily.
Which insurances are mandatory for an entrepreneur?
As an entrepreneur, if you only employ yourself, you need to take out a YEL insurance – the self-employed person’s pension insurance – and pay the entrepreneur’s health insurance contribution. The health insurance contribution is paid to the Tax Administration along with taxes. The contribution is included in the withholding tax percentage rate.
In some fields of business, an entrepreneur is required to take out certain other mandatory insurances alongside the YEL insurance.
Which industry-specific insurances are mandatory for an entrepreneur?
In some fields of business, in addition to YEL insurance, there are certain other mandatory insurances for an entrepreneur. In the health or medical activities field, an entrepreneur needs a patient insurance to compensate for potential damage caused to a patient during treatment.
Environmental damage insurance is mandatory for a large part of companies that need an environmental or chemical license for their business. If motor vehicles or trailers are in use, a motor liability insurance is mandatory.
You can get more information on industry-specific mandatory insurances from the non-life insurance companies that offer them.
Which insurances are voluntary for an entrepreneur?
For a self-employed person, risks related to personal health or the financials of the business are greater than for an employee. If they are realised, the whole business may temporarily cease. As an entrepreneur, you can enhance both your own and your company's security with various voluntary insurances.
Voluntary insurances for an entrepreneur include
- accident insurance
- medical expenses insurance
- travel insurance
- life insurance.
Voluntary insurances related to the activities and assets of the company include
- liability insurance
- legal expenses insurance
- property insurance
- business interruption insurance.
Some of your voluntary insurances as an entrepreneur are tied to the validity of your YEL insurance policy and your YEL income. Read more about the impact of YEL income on different benefits »
Which insurances should an employer have?
If you are also an employer, you need to take care of the pension insurance for your employees by taking out a TyEL insurance. In addition, you need occupational accident and occupational disease insurances, in connection with which the premiums of employee group life insurance are paid for.
Mandatory and voluntary insurances for an entrepreneur
|Insurances for an entrepreneur||Mandatory or voluntary|
|YEL, the self-employed person’s pension insurance||Mandatory|
|Motor liability insurance||Mandatory, if motor vehicles|
|Employees’ insurances||Mandatory, if employees|
|Life and disability insurances||Voluntary|
|Medical expenses insurance||Voluntary|
|Business interruption insurance||Voluntary|
|General liability and legal expenses insurances||Voluntary|
What you need to know about the mandatory YEL insurance
Why is YEL insurance mandatory?
The YEL insurance is the basis for your pension and social security as an entrepreneur. Therefore, it is a statutory insurance – meaning it’s mandatory. YEL insurance secures your livelihood in old age and in the case of disability or the death of a family’s breadwinner.
The insurance is based on YEL income, which refers to the monetary value of your work input as an entrepreneur. The daily allowances paid by Kela, such as sickness and parental allowance, as well as the level of your unemployment security are also based on your YEL income.
Who needs to take out YEL insurance?
You need to take out YEL insurance if you:
• are 18—67 years old
• work as an entrepreneur continuously for at least four months
• your YEL income is at least EUR 8,261.71 per year in 2022
• work in your company.
• live in Finland.
When should YEL insurance be taken out?
You should take out YEL insurance when your entrepreneurial activities meet the above conditions. It’s wise to take out the insurance immediately, but in any case, no later than six months after the conditions have been met.
If the insurance is taken out retroactively, it needs to take effect from when the work that meets the insurance requirements started.
What you need to know about the YEL income
Your YEL income should correspond to the monetary value of your work input as an entrepreneur. When taking out YEL insurance, you need to estimate the amount of your YEL income, which we will later confirm to you. When confirming the YEL income, we will take into account the information you have provided on your entrepreneurial activities as well as your own estimate.
What happens if an entrepreneur does not take out YEL insurance?
As an entrepreneur, you are responsible for taking out YEL insurance within six months of the beginning of your entrepreneurial activity. If the insurance is taken out later, you may have to pay an increased insurance contribution.
The State Treasury makes the decisions regarding penalties due to negligence. A negligence penalty will be sent on a separate invoice by the pension insurance company, after it has received a decision on the matter from the State Treasury.
The Finnish Centre for Pensions oversees the pension insurance of entrepreneurs. If an entrepreneur has neglected to take out YEL insurance, then The Finnish Centre for Pensions can take out the insurance on behalf of the entrepreneur and at his or her expense.
In this case, the entrepreneur also loses the right to the discount for new entrepreneurs.
It’s possible to take out YEL insurance retroactively for the current year and three years prior to it. It’s not possible to accrue pension cover from the time before that.
Is YEL insurance ever voluntary for an entrepreneur?
Yes, but only in two cases.
YEL insurance can be optional if your business is so small that your YEL income does not exceed the yearly minimum limit provided for by law. This lower limit is updated annually and in 2022 it is EUR 8,261.71. YEL insurance may also be optional if you have already retired on old-age pension.
Ilmarinen’s administrative cost will decrease 20% in 2024 – As our customer, you benefit right away!
At the start of next year, Ilmarinen’s administrative cost will decrease by roughly 20 per cent. The administrative cost is part of the TyEL insurance contribution, and in that respect, your TyEL contribution will decrease.
EU Framework agreement on cross-border telework 1.7.2023
Some of the EU countries have signed an agreement on cross-border teleworking, according to which an employee working remotely or in-person in two EU countries can, under certain conditions, be insured in the employer's home country instead of their own country of residence.
Self-employed person, did you get a YEL income recommendation from us?
We will be sending out new YEL income recommendations for the first group of our self-employed customers in June. What’s it all about?