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Do I need Income Protection if I am self employed?

Why it is important for those who are self employed to consider an Income Protection policy?

self employed carpenter using a lathe

What is Income Protection?

Income Protection is a policy which will payout an income if you are incapacitated and unable to work due to illness or injury. A policy will normally pay out between 50% and 70% of your gross income but this varies depending on the policy you have opted for.

By having an Income Protection policy in place, you can avoid using up your savings to pay your regular bills. Income Protection is there to help you with the cost of living so you may find policies have restrictions on pay outs being used for business purposes.

Talk to our expert partners today and they can advise you on how Income Protection can give you peace of mind.

Why is Income Protection important if you are self-employed?

For any working person being taken ill or suffering an injury can be devastating but, if you are employed and off sick, usually you can at least claim Statutory Sick Pay. When you are self-employed this is more than likely not available to you so you need to put your own plan in place to make sure you can still pay those bills if you are unable to work for a length of time.

If you run your own business, being off work may mean that there is no income from the business at all - if you are a decorator or carpenter for example - so a policy which pays you out a percentage of your income could tide you over until you are fit and able to work again.

Income Protection can help with debts, mortgage payments, childcare and household bills so you can concentrate on improving your health without worrying about your finances or loved ones.

Just click on the Green Button at the top, pop in a few details and you can start your search for Self Employment Income Protection now

How much can it cost for Income Protection?

There are various factors that can affect your Income Protection premiums including:

  • What proportion of your income you want to protect

  • What your occupation is

  • How long your deferral period is

  • How long you want to be able to claim for

  • Your age

  • Your medical health

What do I need to think about before choosing an Income Protection policy?

  • How long do you want your deferral period to be?

This is the length of time between unable to work and when you start claiming on your Income Protection policy. Some people prefer to start claiming immediately whilst others have funds they can use first and would then claim on their policy at a later date.

  • How long do you want the pay outs to last?

You can opt for short term and, for example, just have pay outs for a year. Alternatively you can choose a longer term such as until retirement.

  • How is Income Protection calculated if I am self employed?

Usually income is calculated based on how much profit you make before tax each year. How much flexibility there is in these calculations will depend on the insurer.

How can our expert Income Protection partner help?

There is such a range of roles for the self-employed so to ensure that you have the correct policy in place - and hopefully at the most competitive price - talking through your needs with an expert can really help..

One of the issues with Income Protection is the different definitions around the term 'incapacitated' - As an example, if you have a leg injury then you would not be able to do a job which involved climbing up ladders but, if your job is an administrative role based from home, then you may well still be able to carry out your job.

Our partner can discuss your options with you so you have a clear understanding of what kind of income protection you might need. They are then able to talk you through the policies that are available and what they will cover

Click on the link below and our experts will be in touch to discuss your Income Protection needs.

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Our expert partner is LifeSearch who are one of the UK's largest life assurance brokers. They can search through policies from some of the leading insurers to discover the cover you need. The companies include AIG, Aviva, British Friendly, Legal & General, LV=, Royal London, The Exeter, Vitality, Scottish Widows, National Friendly, Shepherds Friendly, Cirencester, Holloway, Guardian and Zurich. Lifesearch, like MoneyMaxim, are regulated and authorised by the FCA,. They are able to offer a guarantee to get you the right cover at the most competitive premium they can. There are no fees and no obligation for their service.

Image courtesy of: Pixabay

This content was last reviewed on 07/06/2023