If you run your own business it is important to consider self employed insurance to protect both your income and your health. There are a number of personal insurance policies that can be taken out whether you are employed or self employed, such as health insurance, income protection (also known as permanent health insurance), life insurance and critical illness cover.
Types of self employed insurance
Health Insurance
Private health cover is a vital form of self employed insurance. It is not only important for personal protection but in many cases it is also important for business protection also. Those who are self employed have a business to manage and cannot afford the time it takes to gain treatment on the National Health Service. With NHS waiting lists often running into the month’s, private healthcare is a vital option for speedy treatment and recovery.
Unless affordability is an issue, we would usually recommend a comprehensive self employed health insurance plan. With this type of policy there is generally full cover for outpatient treatments, tests and scans, which means that potential ailments that do not require an immediate overnight stay in hospital can be diagnosed and treated quickly.
There is also a greater level of physiotherapy cover which would come in particularly useful for self employed individuals who work long hours and have a greater chance of suffering back problems. If you need to travel abroad on business some comprehensive plans also include overseas cover. Naturally, all health insurance plans, whether basic or comprehensive, cover treatment, tests and scans that require an overnight stay in hospital.Income Protection
Income protection (or permanent health insurance) is another vital form of self employed insurance. Individuals with their own businesses do not have the luxury of sick pay to support them should they fall ill. Furthermore, given that premiums do not usually rise as a result of being self employed the relative value of an income protection plan is
Self employed income protection plans provide a monthly income should the policyholder suffer sickness or injury that prevents them from working. It is usually possible to insure up to 65% of gross earnings (your share of pre-tax company profits) but this percentage will vary depending on how much you wish to insure. Should a claim need to be made the insurer will usually estimate your monthly benefit based on gross earnings over the previous 12 months or 3 years if earnings are volatile (with your initial sum insured being the maximum limit).
Most insurers will provide an option to protect your income if you are unable to work in your normal job, this definition is called ‘own occupation’ rather than ‘any occupation’. However, if your work contains a lot of manual work it may not be possible to insure yourself with this definition.
In this case a ‘work tasks’ definition would be used, which means that a claim would be valid if you cannot perform certain functional tasks such as bending, walking and climbing. Although this definition provides a lower level of cover than an occupational based definition it may be suitable for individuals in manual work as the risk of functional injury is significantly higher.
Life and critical illness cover
Life insurance (also known as term assurance) and critical illness policies are an important form of personal and family protection whether you are employed or self employed. Life insurance can provide a safety net for your family should the worst happen. It can be used to cover living expenses, any potential liabilities arising due to your death or for mortgage protection purposes.
Adding critical illness to a life insurance plan significantly increases the degree of policy coverage. A critical illness policy pays out a tax-free lump-sum directly to the policyholder should they suffer a serious illness (such as cancer, heart attack or stroke). The payout from the policy can be used for whatever purposes the policyholder decides (possibly to repay a mortgage for example). It should be noted that a combined life and critical illness policy will usually only payout once upon first event.
Our clients requiring self employed insurance
We frequently serve clients who have decided to set up business on their own nand require a variety of self employed insurance. Most of these individuals have had positions where their previous company provided them with various health and protection insurances as part of a group scheme. Naturally, upon setting up on their own they have had to forgo the cover afforded to them by their company. Fortunately, the health and protection policies previously held can be taken out as specialist self employed insurance through the personal insurance market.
We also serve clients who have been self employed for a long time but have not thought about their personal protection options until there has been a scare close to home. It is usually the case that as we get older we start to acknowledge our infallibility and look for protection options to cover both ourselves and our family.
It is also common for individuals to be looking at the potential risks they face in the run-up to retirement. It may be the case that they want to protect their income for the last ten years of their working life so that they can plan for their retirement. Whatever the reason for desiring cover we are here to help in any way we can.
Next steps
If you would like to speak to one of our advisors about your self employed insurance options then please feel free to contact us. One we have discussed your requirements and the policy options available to you we can go to market and compare the quotes provided by the UK’s leading insurers.
