Income protection for the self-employed in the UK
Self-employed people get no sick pay. How income protection works and what to look for when you choose a policy.
Many Polish people in the UK are self-employed: in construction, transport, cleaning, beauty, or as drivers. It gives you freedom, but it has one weak spot that's easy to forget: if you fall ill or have an accident, your income can drop to nothing overnight. That's exactly what income protection covers.
Why are the self-employed especially exposed?
An employee who falls ill gets Statutory Sick Pay, and often sick pay from their employer too. Self-employed people aren't entitled to Statutory Sick Pay. They can apply for state benefits such as ESA or Universal Credit, but these are usually far lower than their normal income. Meanwhile, the bills, the mortgage or the rent don't wait.
How does income protection work?
If illness or injury stops you working, the policy pays you a set amount every month. The benefit is usually a share of your income rather than all of it, and it's paid until you go back to work, the policy ends, or for a set period stated in the policy. You can spend the money on anything: bills, your mortgage, family life.
What to look for when choosing a policy
- Deferred periodThe time between stopping work and the first payment, for example 4, 8, 13 or 26 weeks. The longer the deferred period, the lower the premium. It's best matched to the savings that would carry you through the first weeks.
- Payment periodShort-term policies pay for a limited time, for example one or two years per claim. Long-term policies can pay until you return to work or the policy ends. Long-term cover costs more, but it protects you through a serious, long illness too.
- Definition of incapacityThe best is "own occupation" cover, which pays if you can't do your own job. Narrower definitions can refuse a claim if you could in theory do some other work.
- Amount of benefitThe insurer sets the maximum based on your income, for the self-employed usually from your Self Assessment tax returns. It's worth keeping them in order.
How much does it cost?
The premium depends on your age, health, whether you smoke, your job, the amount of benefit, the deferred period and how long it pays out. Manual work, for example in construction, usually means a higher premium than office work. With the right settings, though, you can find cover you can afford.
Income protection and critical illness cover
They're two different policies that work well together:
- Income protectionA regular monthly payment when you can't work because of any illness or injury the policy covers.
- Critical illnessA one-off lump sum when you're diagnosed with one of the serious conditions listed in the policy, whether or not you go back to work.
Many people combine the two, so both the everyday bills and bigger costs are covered.
Who needs it most?
It's especially worth considering if you're self-employed or a sole trader, you're paying a mortgage, you support a family, or you don't have savings that would see you through a few months without income.
Self-employed and want to know what cover would cost? Get in touch. We'll talk in Polish or English, choose the deferred period and benefit to fit your situation, and prepare a free quote.