Protect your income
If you are self-emplyoyed being too sick to work is likely to cause an instant cash problem, income protection will provide the sick pay you need to keep the bills paid until you can get back to work!
- Age-Related policies - The premiums are cheaper but price will increase each year. These plans are not affected by occupation or lifestyle so are great for higher risk individuals.
- Guaranteed plans - the price will stay the same or only increase if you increase your cover.
- Reviewable plans - the insurer can increase your plan as you get older (but cheaper up front)
Protect your health
Private health insurance can supplement NHS treatment to get you back to health as fast as possible. For the self-employed; time is not a luxury, so it can be worth taking advantage of the benefits health insurance provides and make sure that your health care is of the highest standard available:
- Shorter waiting times for tests or procedure
- More treatment options - access to the latest licensed drugs
- Higher standards of care
- Faster test results
- For a business group insurance quote your business must have at least one other paid employee
It can be impossible to predict injuries or debilitating illnesses but for the self-employed planning for them is essential. If any of these happen, you will still need to pay your mortgage/rent and bills and with no employer to rely on for sick pay you will need to have your own provisions in place.
Having the right type of insurance can help you to cover these expenses, and provide your own form of death in service to protect your family if the worst should happen.
Life Insurance
Most insurance for the self-employed focuses on protecting your wealth and health, life insurance seeks to look after those you leave behind if you pass away. Being self-employed you will need your own "death in service" package. Thankfully these are the most affordable plans!
Critical illness
A critical illness policy will pay out a lump sum if you’re diagnosed with one of the specified serious/critical illnesses named on your plan. Commonly these include cancer, heart attacks, strokes, multiple sclerosis and accidents which may have left you disabled.
What will it cost?
Income protection is likely to be the most important policy for the self-employed and are made up of a number of factors which determine your price, both now and in the future. It is important to understand these so that when deciding on your plan you make sure that the areas most important to you are not compromised.
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The most obvious factor in determining your price is how old you are, whether you are healthy and whether you smoke. There is not much you can do about this however so the trick is of course to try and take out a plan when you are as young and healthy as possible so that plans remain affordable in the future.
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The Term of your plan (expiry date) on fixed price plans plays a big part in your price, the longer you want your price fixed for the more it costs. Ideally you want to be covered until your expected retirement age.
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The sum assured (amount paid out if you can't work) is a big factor and as a rule most insurance companies will not allow you to insure yourself for more than 65% of your gross income. The best thing to do is work out how much cover you NEED per month to meet all your bills.
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Is your job dangerous? If you work on oil rigs for example or as a builder it is often more expensive than someone who works in an office environment due to the increased risk of injury.
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How fast you need to claim if unable to work is a key factor, if you have limited savings and little/no sick pay you will want policies that pay out quicker. The faster you need the money/the easier it is to claim and so the price goes up.
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How long can you claim for makes a huge difference: cheaper plans which pay out a maximum of 1/2 years give you that length of time to get back to work. However "Full term" plans will continue to payout until your plan expires if you can never return to work, these are obviously allot more expensive.
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Fixed price or Annually Increasing - Having a fixed price is more expensive now but in the long term it is nearly always cheaper over the full term of the plan.
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