When you’re self-employed or a contractor, you get the sweet perk of being your own boss, but you wave goodbye to employee benefits like company sick pay.
Getting income protection is one step you could take to provide a financial safety net if you’re unable to work because of illness or injury.
What is income protection insurance?
- Income protection insurance is a helping hand that gives you money each month if you’re ill or injured and can’t work. It’s meant to replace some of your lost earnings, helping you pay the bills and carry-on living life as normally as possible.
Do you need income protection insurance if you’re self-employed?
- When considering if income protection insurance is right for you, there are a few questions to ask yourself.
- If you get ill or are injured and can’t work, will you still be able to look after yourself and your loved ones financially? If you stop receiving any income, is there anything else that could help you get by, like savings.
- Think about how you would pay everyday bills such as your mortgage or rent, utilities, food, and other general living costs.
- As well as continuing to support loved ones, you also may have to think about other things, like how to keep your business afloat.
How income protection insurance works when you’re self-employed?
- Income protection insurance gives you regular money each month if you can’t work because of illness or injury. Depending on the policy you choose, and if your claim’s successful, you’ll receive payments until you’re either fit to return to work, for a set amount of time, the end of the policy term, or you retire.
- With most income protection insurance, you can make as many claims as you like while the policy lasts.
The costs of income protection?
- The amount you pay in premiums each month depends on your particular circumstances. Some things that can change the amount you pay, include:
- Your job – The riskier your job, the higher your premium will be.
- Your age – The older you are when you take out a policy, the higher your premium will be because you’re more likely to suffer an injury or become ill.
- Your health – If you have any pre-existing conditions, depending on how severe they are, this might cause increased premiums, or the condition could be excluded from your cover.
- How much income protection benefit you’ll receive – the more you’ll receive the more you’ll have to pay each month in premiums.
- How long your deferred period is – The longer your deferred period is, which means the longer you go before receiving your first payout, the lower your premium could be.
- When you want your policy to end – you may want your policy to run until your planned retirement age or until your mortgage ends. The longer your policy lasts, the higher your premiums could be.
