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Self employed income protection

Working for yourself is a great option for flexibility. It allows you to control your working hours and all other aspects of your job role.

There are around 4.25 million workers in the UK that work on a self employed basis, as of June 2022.*

Being self employed has many advantages, but there can be some downsides. Your monthly income can be drastically impacted, if you can’t work due to illness or injury. Self employed income protection insurance can provide a safety net to help cover your bills until you are back on your feet.

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Self employed income protection is a great option for someone who works for themselves. This cover should be straightforward to access for most. You should be able to secure great cover to avoid financial difficulty, if unable to work due to an accident or illness.

Many people in the UK will be able to access government support via statutory sick pay (SSP). This is not available for people who work for themselves rather than through an employer.

Certain people may be able to access what is known as an employment support allowance (ESA). While helpful, the payments from this will be significantly less than your usual monthly income. Also the claims process can take up to 13 weeks or more in some cases.

This leaves income protection an attractive option that can provide much needed financial support at a difficult time.

Does income protection insurance pay out for self employed?

YES – a self employed income protection policy will pay out if unable to work due to illness or injury. This is very helpful to provide additional financial support when unable to work for long periods of time.

After the claim is approved, you should receive a direct tax-free payment every month. This will normally cover around 50%-70% of your usual pre-tax income.

There are numerous illnesses and injuries you will be able to claim for. Most policies will continue to pay out every month for up to 12 or 24 months from the initial claim.

Some of the most common reasons for self employed income protection claims are:

  • Cancer
  • Mental health
  • Musculoskeletal issues
  • Fractures

Comparison is always going to be the best way to find the ideal insurance policy for your needs.

It is worth searching policies across insurance companies. You can then assess how extensive the cover that each one is provides is and get an idea of average costs. Usually there will be one provider that will be cheaper than others, and most suitable for your monthly budget.

Our experts can help you compare policies across the UK’s top insurance providers to find the most competitive pricing.

YES – self employed people should have no issue in accessing a great income protection policy. The insurer will ask questions about your job and general health and lifestyle. They will use this to assess which of their policies is most suitable for you.

How much is income protection for self employed?

Self employed income protection is a very affordable form of insurance. It is designed to help you to pay your bills when you are unable to work due to being ill or injured. It is similar to CRITICAL ILLNESS COVER, but that will pay out one lump sum rather than monthly payments.

How much you pay will depend on several factors, the key one being how much you would like to spend per month for this policy. You can usually choose or adjust an insurance policy to make it more suitable for your budget. With so many policies currently available, you should be able to access one with very reasonable pricing.

Other things that could potentially affect the price of your policy include:

  • Age
  • Height
  • Weight
  • Other general health/lifestyle factors

For more information about the differences between critical illness cover and income protection policies, read our guide ‘Critical illness cover vs income protection’.

Cheaper income protection self employed

There are several considerations when it comes to the price of self employed income protection insurance. There will be various factors that will affect how much you pay. These include:

Age – insurance policies will generally be cheaper the younger you are when you take the policy out.

Comparing providers – a great way to reduce costs is by comparing the pricing across insurance providers. Comparison can often reveal one or two lenders with significantly lower pricing for the policy you require.

Get advice – an income protection expert will be best placed to advise about which policies are the best for your budget and needs.

Improving health and lifestyle – working on improving your health and lifestyle where possible e.g. losing weight can help to reduce premiums.

Smoking – smokers will often pay slightly more for cover, so it is worth considering quitting or cutting back to reduce the amount you will pay.

Pre-existing conditionspre-existing medical conditions can affect the price of your premiums, speak to an insurance expert for more advice if worried about this.

If you want to save money on your income protection it is best to consider all the above.

There are several different types of income protection insurance available for self employed people. These are:

  • Short-term income protection insurance: will usually pay out for up to 12 or 24 months from the point of claim. This option can be cheaper than some other income protection policies.
  • Long-term income protection insurance: will continue to pay out right up until the end of the policy term, often longer than 24 months. This cover is very comprehensive and so will be is the most expensive in terms of monthly premiums.
  • Guaranteed sick pay: generally cheaper than a full income protection policy as it excludes pre-existing conditions as reasons to claim. This policy type will in most cases pay out for up to 6 months from the point of claim. 
  • Personal accident insurance: usually the most cost effective form of income protection. A main selling point of this policy is that it will pay out for hospitalisation over 24 hours, injuries and accidental death

Does being self employed affect income protection insurance?

NO – being self employed shouldn’t affect the ability to take out income protection insurance. Income protection insurance will allow someone who is self employed additional support if unable to work. This can prevent you from having to rely on loans or savings.

The insurer will simply ask the same questions they would ask any other applicant. You can be self employed in a variety of job roles. This means it is possible they will ask questions specific to the industry that you work in. This will be alongside the usual general health and lifestyle questions.

Self employed income protection insurance questions

Insurers will usually ask questions related to your general health and lifestyle. This will help the provider assess how likely you are to need to claim. They will then adjust your self-employed income protection policy accordingly.

Common things insurers will ask about will be:

  • Age of applicant
  • Height and weight
  • General lifestyle
  • Dangerous hobbies
  • Pre-existing medical conditions

Self employment can apply to careers such as beauticians, engineers, electricians, and many more. As self employment is a career option in many industries, the actual job roles of self-employed workers can vary massively.

Your insurance policy relates directly to your career and income. The provider will most likely ask more questions specifically related to the industry you work in.

Self-employed workers are unable to claim statutory sick pay (SSP) when off work due to illness or injury. There were previously SEISS grants (self employment income support scheme SEISS) available. These were directly related to Covid-19 and unfortunately are now unavailable.

There is however another income support scheme known as the employment and support allowance (ESA). This is intended to help cover living costs and in ideal cases support a return to working. This scheme is available to self-employed people, as well as those who are employed or unemployed.

To be eligible you must be under the state pension age. You must also have contributed enough National Insurance tax within the last 2-3 years. You can also not access this support if on Jobseeker’s allowance or already in receipt of statutory sick pay.

Common questions about self employed income protection

Here we have the answer’s to some of our customers most frequently asked questions about self employed income protection:

Is it worth getting income protection insurance if I am self employed?

Income protection insurance is a great idea for self employed workers. They may not be able to access additional support in the same way as those employed through another party.

This policy can help offer financial support, if you were unable to work for an extended time period due to illness or injury.

What is not covered by self employed income protection?

This will be dependent on the individual policy/provider and the health and lifestyle of the applicant.

Providers may place exclusions (things you cannot claim for) on policies for various reasons such as a pre-existing medical condition. It is worth checking the terms of individual policies before choosing one.

What conditions are covered by income protection?

Most income protection policies will cover you for any injury or illness that prevents you from working for 4 or more weeks (signed off by a GP or doctor).

Certain policies will have restrictions e.g. personal accident insurance will only pay out for accidental injuries and not sickness.

How long will income protection pay out for?

This depends on the type of income protection policy you choose

A short term income protection policy will normally pay out for between 12 and 24 months. Longer term policies can pay out for as long as needed, right up until retirement or returning to work.

Useful resources for self employed

Gov.uk – Working for yourself

Gov.uk – Employment and Support Allowance (ESA)

Citizen’s Advice – Reporting self-employed earnings

The Times – How do benefits and sick pay work if you are self-employed?

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