Income Protection For The Self Employed
Can I Get Income Protection?
As self-employed people don’t benefit from sick pay or redundancy pay, it might be more beneficial than you think to get self-employed income protection.
Income protection for self-employed people is a policy that pays out if you can’t work due to an injury or illness. Having this kind of insurance will protect you from being out of pocket during a difficult time. As a self-employed person with many things to worry about, by taking out Income protection Insurance would be one less thing to worry about.
Having the peace of mind that even if you couldn’t work, you’d still have some self-employed income for mortgage payments, debts and bills. You would be able to look after your family and possibly even maintain the same lifestyle, depending on how much cover you get.
Different Types Of Income Protection:
There are many different types of self-employed income insurance to think about. These include:
Self-employed sickness insurance: This cover will protect your income if you have a short-term illness. You could also get protection for more serious illnesses that mean you can’t work. Or, you can arrange a lesser cover which won’t replace your income, but will give you the equivalent of statutory sick pay. These are both types of self-employed sick pay insurance.
Self-employed injury insurance: This replaces your income if you can’t work due to an injury, either in the workplace or enjoying a bike ride down a mountain. There are no limitations on cover only applying whilst working.
Self-employed sickness and injury insurance: A combination of the both types of insurance. This is a popular choice from our customers at Protect Income Insurance. As it provides protection against illness and injury.
How Does It Work?
For the self-employed, no income can be a daunting prospect. But with income protection for self-employed people you make regular monthly payments to your insurer. Then, if you need to make a claim, you do so, and it pays out.
Some self-employed work insurance policies are short-term, so they only pay out for a specific time period. These policies are designed to help you when you’re facing a temporary challenge. If you do have a short term illness, these policies will pay out for a year or two.
If you’re never able to work again due to illness or injury, some sickness insurance for self-employed people will pay out until you die.
It all depends on what kind of self-employed sick pay insurance you choose.
What Are The Benefits Of Income Protection?
The most important advantages of self-employed income protection are:
A monthly income until you return to work
An income to cover your bills if you were too ill or too badly injured to work
No need to decimate your savings to get by during a difficult time
It’s a tax-free benefit
Choice, you are to take a level of cover that suits your needs and budget
It makes the jump from employment to self-employment less daunting, knowing that you can create a bespoke safety net to protect yourself in the event of illness or injury.
Do I Need It?
As with all important choices, it is very important to balance the options to make the decision easier. Our Specialist team at Protect Income Insurance, have many years of experience in helping people with any questions they may have.
Are There Any Downsides?
The biggest downside is the monthly premium you’ll pay. However with premiums adjustable for each person’s budget and benefit needs. Of course it’s the same situation with any insurance you buy. But many of our customers and most people feel it’s worth it if the time comes that you need to claim on your self-employed loss of earnings insurance.
Finding The Best Self-employed Income Protection
Finding the right income insurance for self-employed people can be difficult, as your income may not be consistent each year. When you’re looking for the best income protection for self-employed people that's right for you and your family. It is important to make the right choices.
You will need to think about what income you want if you can’t work. You can choose between a percentage of your annual income, or a fixed amount that you’ll need your insurance policy to pay out.
The next thing to think about is, what length of time you want the policy to pay out for. You can usually get cover until a set age, which varies depending on which insurer you choose.
You will need to base your decisions on your outgoings and commitments. Think about what debts you have, your mortgage or rent, your usual income and the size of your family. At Protect Income Insurance, our team will help you calculate the cost of living and what benefit amount you might need.
The Cost Of Income Protection For Self-employed People?
The cost of your self-employed income protection is based on a few key factors including:
How much you want the policy to pay out each month
The chances that you’ll find yourself unable to work
Age
Lifestyle, including whether you smoke and exercise
Health (history, current health, weight, family medical history)
The job you do (whether it is deemed as high risk)
Deferment period or waiting period before the policy starts.
The easiest way to work out how much cover you need is to, add up all your debts including your mortgage, loans, credit cards etc. Then add on any expenses you’d need to cover like food, childcare, holidays. This will help you work out the level of cover you should ideally be looking to buy.
Are There Exclusions?
Like all kinds of insurance, self-employed income insurance has exclusions which you’re not covered for. The most standard exclusions include illnesses or injuries caused by:
Criminal activity
Illegal drugs
Alcohol or other substance abuse
Travel to countries that the Foreign Office has advised against
Regions with epidemic outbreaks.
If You Have Pre-existing Health Conditions?
When you apply for accident and sickness insurance for self-employed people, you may have to fill out a medical questionnaire. You’ll need to declare any medical conditions you’ve suffered in the past five years.
If you do have a pre-existing or chronic condition. An insurer is likely to do one of three things. These are:
Apply standard terms for loss of income insurance for self-employed people
Provide sick pay insurance for self-employed people, but for an additional premium
Completely exclude the condition from protection.
It’s very important to be honest about your medical history when you take out your insurance. It could invalidate your policy if you withhold medical information. If your insurer checks your medical history and sees you were dishonest or left some information out, they might refuse your claim.
