Do You Need Self-Employed Income Protection Insurance?
Those starting out in a self-employed role spend the early stages of their new career trying to cut costs and set out a short-term budget for their business. With that being said, income protection insurance is the only way to guarantee a regular source of income in the event of you being unable to perform in your role.
According to the CSO, workers over the age of 35 have a one in six chance of spending over six months out of work because of an accident or injury.
You may want to weigh up the impact a loss of earnings would have on your specific situation. For instance, if you have savings reserved for a period in which you can’t work, you may feel comfortable without income protection insurance.
If an injury, illness or disability would make you unable to support yourself and your family, you may place a higher personal value on insurance.
Think about whether it would be possible to pay your mortgage or rent, and cover the cost of food and utilities, if you were out of work.
How Much Does Self-Employed Income Protection Insurance Cost?
The cost of your policy will be influenced by several major factors:
The job you are in: how risky is your place of work? If you work as a roofer, for example, the risk of you suffering an injury via a fall is higher. An office worker’s risk of a workplace accident is substantially lower.
Your age: unsurprisingly, the older you are when you take out an income protection policy, the more your premium is likely to cost. Your risk of illness increases with age, and this is reflected in the price.
Your health: pre-existing conditions are likely to be excluded from any income protection insurance policy. If, for example, you are medicated for anxiety or depression, your policy may include a mental and functional health disorder exclusion. If you experience chronic back pain, there is likely to be a back/spinal exclusion, etc.
Your deferred period: deferred periods for income protection payments typically range between four and one-hundred and four weeks. The shorter you want to wait until receiving your first payment, the more your premium will cost.
How much of your income you want to protect: income protection insurance is not intended to replace the entirety of your salary. It offers a payment that can cover some of your expenses while you are unable to earn a salary at work. When you are setting up a policy as a self-employed worker, consider the significance of your bills and what needs to be covered in the event of an accident. The more you want to insure, the more your premium will be.
Family medical history: if a hereditary illness runs in your family, insurance companies are likely to exclude that condition from any policy.
Lifestyle: the price of your policy may be influenced by factors like whether you smoke as well as your BMI.