Being self-employed offers freedom and flexibility, allowing you to work on your own terms and build a business around your lifestyle.
Are You Self-Employed? Protecting Your Income Is Essential
Being self-employed offers freedom and flexibility, allowing you to work on your own terms and build a business around your lifestyle. However, being your own boss also means taking responsibility for your own financial security.
Unlike employed workers, self-employed individuals are not usually entitled to Statutory Sick Pay. This means that if illness or injury prevents you from working, your income could stop altogether.
Without the right protection in place, this could leave you financially vulnerable at a time when you should be focusing on your recovery.
No Sick Pay, No Financial Safety Net
Research suggests that many self-employed people take fewer sick days than employed workers due to concerns about losing income. However, continuing to work while unwell could potentially impact your health further and delay recovery.
This is why many self-employed individuals choose to consider income protection insurance as part of their financial planning.
What Is Income Protection Insurance?
Income protection insurance is designed to provide financial support if you are unable to work due to illness or injury.
Depending on the policy selected, income protection may provide regular monthly payments to help cover essential living costs while you recover and are unable to earn an income.
Policies can vary, so it is important to understand:
- What level of cover may be suitable.
- How long payments could last.
- Which medical conditions may be covered.
- Any exclusions or limitations within the policy.
- Income protection for self-employed workers.
For self-employed individuals, having income protection can provide reassurance that there may be financial support available if unexpected health issues arise.
Unlike some other forms of protection insurance, income protection can potentially cover a broad range of illnesses and injuries, including both physical and mental health conditions, subject to policy terms and conditions.
If you have any pre-existing medical conditions, these may affect the terms of cover available.
Understanding Deferred Periods
Income protection policies often include a deferred period. This is the period of time between stopping work and when the policy may begin making payments.
As self-employed individuals do not typically receive employer sick pay, some people choose shorter deferred periods to access financial support sooner. However, this can affect the cost of premiums.
Choosing the right deferred period will depend on your personal circumstances, savings and how long you may be able to manage financially without income.
Does Your Occupation Affect Income Protection?
Your occupation and working environment can influence the type of cover available and the cost of premiums.
For example, occupations involving physical labour, working at height, or operating machinery may be viewed differently by insurers compared to office-based roles.
When applying for self-employed income protection insurance, insurers will usually ask questions about:
- Your occupation.
- Daily duties.
- Working environment.
- Income.
- Medical history.
Providing accurate information is important to help ensure that your policy remains valid.
Executive Income Protection For Limited Company Directors
If you operate through a limited company, you may wish to consider executive income protection.
This type of policy is typically arranged by the business and can help protect a director or employee in the event that they are unable to work due to illness or injury.
Executive income protection can form part of a wider business protection and financial planning strategy.
Why Protection For The Self-Employed Matters
When you are self-employed, your ability to earn an income is often your most valuable asset. Having the right protection in place could help provide greater financial stability and peace of mind if the unexpected happens.
Here to help
We can help you explore income protection options tailored to your personal circumstances, occupation and financial needs.
As with all insurance policies, conditions and exclusions will apply. Please note, our business protection service is arranged by introduction only.
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