Income Protection for the Self-Employed
Article published on 23rd November 2011
Income Protection is available to both employed and self-employed individuals. This article focuses on the benefits of Income Protection for self-employed individuals.
What is Income Protection Insurance?
Income Protection Insurance, sometimes referred to as Permanent Health Insurance, can provide either short or long term financial protection dependant upon your needs. The policy can run for as little as 5 years or be extended through to retirement age.
Income Protection is designed to provide you with a monthly benefit in place of your income should you find yourself out of work due to a disability, long term injury or prolonged illness that prevents you from working. You are able to choose whether you require financial protection in case you are unable to continue to perform your own occupation or any suited occupation.
Income Protection does not cover you for unemployment / redundancy (employed individuals) or ceasing to trade (self-employed individuals). As an alternative to long term income protection cover, self-employed persons may instead wish to protect themselves against a short term Accident or Sickness that could affect their ability to work for up to a maximum of two years. These policies may be cheaper for people in manual occupations and for people with health issues, however the list of exclusions is far greater than with income protection. If you would like to know more about Short Term Accident and Sickness Cover then please click Here to find out more.
Benefits of Income Protection Insurance for the Self-Employed
Income Protection Insurance should be considered for any person who relies on an income to pay bills, a mortgage or just general living costs.
Nobody likes to think about what would happen if you they suffered a prolonged illness, injury or disability. An Income Protection Policy can offer you peace of mind knowing that if something did happen to you to diminish your working capacity, you would still be financially safe with a regular monthly benefit for your predetermined time period.
If you are employed by a company you should determine the benefits that you would be entitled to in the case of injury, illness or disability. As many employers will not pay a full salary beyond a short-term period you can then establish an Income Protection Insurance that will ?top up? your income to your normal monthly salary.
As a self-employed individual it is up to you to protect your finances and Income Protection Insurance can help you to do this.
Income Protection Policies are Flexible!
Many Income Protection Policies have no limit on the number of claims that you can make on the policy.
If you suffer from an injury resulting in you not being able to work the policy would replace any income lost by giving you a monthly benefit. If after 5 years your injury heals to the point that you return to work the policy would stop paying you a benefit but continue to be in place. If you then suffered another injury, disability or prolonged illness later in life and are unable to work again, you will be able to claim again on your policy.
Income Protection Policies can often be tailored to your individual circumstances. With some policies you can even take a 'career break' if you are between jobs and then continue your policy when you start work again.
Changing career often does not affect your policy although you should inform the Insurance company if your salary or occupation has changed to ensure that you still receive the most appropriate cover for your needs.
Here are some of the main points of an Income Protection Policy.
- Can provide you with financial security until your retirement age from disability, long term injury or prolonged illness.
- No limit on the number of claims you can make on the policy.
- Your policy runs from the day it starts until your chosen timeframe i.e. from 5 years to retirement age.
- Your policy can be tailor made to fit your circumstances.
- Gives you a replacement monthly income if you can no longer work.
- Personal policies are paid free of tax.
What to do from here?
Alternatively if you have more questions or would prefer to talk to one of our industry trained financial advisors for help you can give us a call on 01723 516600.
Looking for more information?
- Next Article: Family Income Benefit
- Previous Article: Should I Get Redundancy Cover?
- List of Articles: Click Here to Return to Insurance Articles