Can You Get Income Protection If You are Self-Employed?

This is a commonly asked question and one that requires a little explanation.

Self-employed versus conventional employment

For those people in what might be termed conventional employment, their employer may have a statutory obligation to provide certain minimum social benefits.

Broadly speaking, that would include a certain minimum period of what is sometimes called sick pay ' amongst other benefits.

If you are self-employed, you typically will have no such automatic entitlement. If you were too ill to work and obtain your normal income, you may need to deal with the financial consequences of that through your own financial resources and reserves.

If you have made no insurance or related provision to help you, then clearly your financial position may deteriorate rapidly.

Government help for the self employed

You may have no automatic right to access any form of income benefit from the government or other social services.

In some circumstances you may be able to apply for what is called ESA (employment and support allowance) but many applicants fail to be approved as being suitable for such help and even if it is forthcoming, the sums involved are small compared to typical average salaries.

It might be prudent to presume that you would receive no income related support whatsoever in circumstances where you were sick and unable to work.

The role of insurance

It may be possible to take out an insurance policy that would provide you with an income in a situation where sickness had made it impossible for you to continue your self-employed occupation.

Benefits might be payable on a variable basis running from 12 months up to perhaps 24 or in some cases, it might be possible to obtain a policy that would generate an income for you up until your normal retirement age.

Providers of these types of policy (e.g. Drewberry Insurance) will typically have a range of options available and the nature of the cover you select will, of course, affect the final premium you pay.

Risk factors

Insurance providers will typically need to know a little bit about your background including issues relating to any existing health conditions you may be suffering from.

Contrary to what you may anticipate, having pre-existing conditions does not necessarily mean that you would be turned down for cover. It may only mean that you will need to pay a possibly modest increase in the premium or perhaps would see some exclusion clauses relating to the condition inserted into the policy.

What is important is that any such conditions are fully and frankly disclosed as part of your application for cover.

Summary

So, if you are someone who is self-employed, you may be able to protect yourself against the impact associated with a loss of income through sickness.

It might be worth finding out more in order to achieve peace of mind.

This article is an original contribution by Jason Hulott.

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