Self-Employed Income Protection – a guide

Imagine what it would be like if you became too ill or injured to work? What if your illness or injury was long-term and meant you couldn’t continue working in your business – would your income grind to a halt?

What if you had a backup plan that paid you an income while you’re in hospital or recovering at home? That would give you peace of mind just knowing you and your family were protected financially should the unexpected happen.

What is Income Protection for the Self-Employed?

Self-Employed income protection insurance will give you a regular monthly income if you are unable to work due to a serious illness or injury sustained in an accident. It’s a long-term insurance policy that will cover you until you can return to work or retire.

It’s important to choose the right provider and policy that suits your individual needs as a Self-Employed person and the work you do. This will ensure the level of cover you buy is sufficient to pay for your ongoing financial commitments while you are too ill or injured to work.

Why is Income Protection important if you are Self-Employed?

As a Self-Employed person, you work for yourself which means the onus is on you to get the job done so you get paid, unlike employed people. If you’re the main breadwinner in your home, what happens if you become seriously ill or injured in an accident?

If you are incapacitated long term, needing ongoing hospital treatment and recuperation at home, where will your income come from? How will you pay the rent or keep up the mortgage payments?

Taking out income protection insurance for ‘Self-Employed people means you can breathe easy knowing your household expenses are covered. The quickest and easiest way to cover yourself is to discuss your options with an independent financial adviser.

What is the difference between:

Personal Insurance

This is the umbrella term used to describe insurance policies that can be taken out to protect your income, health and life. If you have dependents reliant on your Self-Employed income, it’s important to have this type of backup in place if you cannot work.

Income Protection

Income protection insurance will pay a portion of your income if you’re unable to work due to illness or accident. You will receive regular payments until you are fit enough to return to work or retire, however, there is usually a pre-set deferred period before payments begin.

Most policies will cover you for 12 months and some for longer depending on the level of protection you choose. You can also claim as often as you need to during the policy term.

Critical Illness Cover

This type of cover pays you a one-off lump sum if you have a specific serious illness. If you have a pre-existing condition you must declare it. Once the lump sum is paid the policy ends.

The money can be used to pay off debt or change the layout of your home if you need to adapt it for a disability. Premiums are based on age, medical history, work, hobbies and lifestyle. If these pose a risk to your health you will pay a higher premium.

Life Insurance

This protects your loved ones if you die. It’s essential to have this if you’re Self-Employed. Depending on the policy it can pay out a single tax-free lump sum or regular payments to sustain your family following your death.

Private Medical Insurance

If you need an operation urgently, this pays for private treatment which takes less time to access. Some will pay you if you access NHS services instead.

How do I know which insurance is right for me?

Discussing your individual needs with an independent financial adviser like Protection Matters is the simplest way to find the best fit for you and your family. They will help you choose the right provider and policy.

How can Protection Matters help me?

As experienced independent life insurance brokers, we can help you choose the right type of protection for you and your family. We’re authorised and regulated by the Financial Conduct Authority (FCA) which means you can trust our advice.

As independent life insurance brokers, we’re not affiliated with any specific provider. That means our advice is always impartial and we focus just on you and your needs to find the right insurer and personal protection policy.

We’ll ensure you understand what you’re signing up for by guiding you through the terms and conditions. A quick call is all it takes to get your income protection cover in motion.