Recently there have been huge improvements to the range of income protection cover available for contractors, freelancers and the self-employed.
Each year nearly a million people in the UK find themselves unable to work due to a serious illness or injury (ABI 2015). Income protection is a long-term insurance policy designed to help you if you can’t work because you’re ill or injured.
You’re most likely to need it if you’re self-employed or employed and you don’t have sick pay to fall back on.
If something happened to you would you be able to survive on savings, or on sick pay from work? If not, you’ll need some other way to keep paying the bills and you might want to consider income protection insurance.
It ensures you continue to receive a regular income until you retire or are able to return to work, according to the terms of the policy.
It’s not the same as critical illness insurance, which pays out a one-off lump sum if you have a specific serious illness.
Stockport based Hallidays explains how flexible policies are available that:
• cover up to 60% of your earnings, tax free
• begin from the first day of an illness
• cover up to three months between work assignments
• include dividend income as proof of earnings
• increase in line with inflation
Income protection is more affordable than people expect, for example premiums are around £35 per month for:
• 40-year-old contractor (non-smoker)
• £2000 cover per month
• Cover beginning 4 weeks after illness/injury starts and ceasing at age 65