Self employed income protection insurance is a policy that pays you if you cannot work due to an injury or illness.

You do not qualify for statutory sick pay or redundancy pay if you are self employed, but an income protection policy could protect you from being out of pocket.

What types of self employed insurance are there?

  • Self employed sickness insurance means your income is protected if you have a short-term illness, or something more serious and can’t work again.

  • Self employed injury insurance replaces your income if you can’t work due to an injury.

  • Self employed sick pay insurance provides cover for those who are self employed and cannot get statutory sick pay because they do not have an employer

How does income protection work?

Income protection is an insurance policy that protects you if you can’t work because of an illness or injury.

You will be paid an amount, which can be up to 80% of your pre-tax income. This payout will continue until you can work or, if you’re never able to work again, until you die.

What are the main benefits of income protection?

The main benefits of income protection include:

  • A monthly income until you return to work

  • Peace of mind that you can cover your bills while you’re not working

How to find the best self employed income protection cover

Finding the right income protection policy can be difficult when you are self employed, as your income may not be consistent each year.

When you get quotes for income protection, you choose:

  • Income: Choose between a percentage of your annual income, or a fixed amount. Some insurers cap the amount you can get each month or year.

  • Length of time: You can usually get cover until a set age, which varies depending on the insurer you choose.

When you apply for cover, insurers will ask you for at least one year's audited accounts as proof of your income.

What exclusions are there?

Like most kinds of insurance, there are policy exclusions you won’t be covered for.

Some of the standard exclusions include illnesses or injuries caused by:

  • Criminal activity

  • Illegal drugs

  • Alcohol or other substance abuse

  • Travel to countries the Foreign Office has advised against

  • Regions with epidemic outbreaks.

What if you have pre-existing health condition?

When you apply for self employed income protection insurance, most insurers will have you fill out a medical questionnaire. You need to declare any medical conditions you have suffered in the past five years.

If you have a pre-existing or chronic condition, the insurer is likely to do one of three things.

  • Provide cover on standard terms

  • Provide cover for an additional premium

  • Exclude the condition

You can possibly get this reviewed after a certain period of time if you don’t seek any advice, medication or treatment for it.