How Self-Employed Income Protection Insurance Can Help When You Get Sick
Being self-employed comes with its benefits and drawbacks. You’re flexible and can work when you want, and you can pick and choose which jobs you take on. But self-employment is also less secure than regular employment; as a self-employed worker, you won’t benefit from company pensions, holidays, or sick pay. If you don’t have the savings to cover your outgoings if you have to take significant time off work for illness, it might be a good idea to consider getting income protection if you’re sick when self-employed.
What Is Income Protection Insurance?
Income protection insurance is a type of insurance designed for workers in the UK who are not protected by employers’ sick pay or similar schemes which will offer to pay all or part of your salary even when you are too sick to work. Income protection is important, especially for self-employed workers without large savings pots.
By taking out an affordable self-employed income protection insurance policy, you can pay a small amount each month which will give you the peace of mind of knowing that, whatever happens, you will continue to make an acceptable living. Income protection policies are usually available in two forms: policies that end when you can return to work and policies which end after a set period.
Short-term policies, which end after a year or two of sickness, are intended to cover income lost during short-term illnesses or, in the case of long-term illnesses, they can give you the breathing space you need to plan for the future. Long-term income protection policies can continue to pay out even if you’re unable to return to work.
Why Is It Important To Have Income Protection If You’re Sick When Self-Employed?
The Covid-19 pandemic has demonstrated just how important it is to plan for the worst. In fact, nearly half of UK adults are considering taking out income protection in the wake of the pandemic.
If you’re self-employed, it’s important to consider your future even if things don’t go to plan. Unexpected sickness or injuries can prevent you from working for weeks or even months at a time, and with no income protection in place, you could struggle to pay the bills, resulting in loss of property or eviction.
Self-employed income protection insurance can also help you and your family to enjoy a similar standard of living even when you are too ill to work. This is particularly important for families with children, where a significant drop in earnings can mean big life changes that children are not yet ready to understand.
What Will Business Income Protection Cover?
The aim of business income protection insurance for self-employed workers is to ensure that you can pay the bills and retain a decent standard of living even if you fall ill. Income protection policies will usually pay around 50-60% of your usual income after you fall sick, which for most self-employed people is a great deal more than the Employment Support Allowance (ESA) paid by the government, which is between £58.90 and £74.35 per week. You will not pay any tax on your income protection payouts, and you can claim ESA in addition to receiving your income support payments.
Self-employed income protection insurance can be used to pay for:
• Household bills
• Rent or mortgage
• Living costs
• Outstanding debts
However, it can’t be used for:
• Business costs, including office furniture or employees’ salaries
• Large debts, such as paying off a mortgage with a lump sum payment
What Other Kinds Of Insurance Do Self-Employed Workers Need?
As a self-employed trader in the UK, it’s important to protect yourself and your family from future bad fortune. Business protection insurance will cover your essential bills if you fall ill for months or years, but it won’t help you or your family if you die unexpectedly, and short-term protection insurance plans won’t help your family if you are unable to go back to work. It’s worth exploring other forms of insurance, including:
• Critical illness cover, which will pay out a tax-free lump sum if you are diagnosed with a qualifying serious illness covered by your policy, which can include heart attacks, cancer, or stroke.
• Life insurance, which will pay your family a lump sum if you die unexpectedly. This can help to provide for your family even after you’re gone.
Shop For Income Protection Online
At WIS Business Protection, you can shop for various executive income protection policies. This includes income protection if you’re sick when self-employed. Shop online today and find great coverage at the best rates with us, or give us a call to find out more about how we can help to secure your future no matter what happens.