Self Employed Income Protection

There are various types of insurances like life insurance, vehicle insurance, property insurance and one of them is income protection insurance. There are many types of income insurances and one among them is self-employed income protection. This is very popular type of insurance among the self-employed people. Employees are provided with sick leave and pay and insurance benefits. However, employers do not have any sick pay or any income insurance benefits and for them the self-employed income protection insurance is a boon.

When self-employed you should consider certain questions like, how to supplement your income when you are ill or not able to work due to some medical reason? How long will the saving last in case there is no income for some time?  Will the state benefits or the spouse’s income be enough? Self-employed income protection comes to rescue and in general insures 50% to 70% of the gross income. In case of a medical condition which keeps you off from your work, the insurance replaces your income and allows you to pay for your  monthly bills like that of the mortgage, rent, utilities, council taxes, food and many such expenses.

Why to have Self-employed income protection?

  • Even when not earning, the income through insurance allows you to pay your bills on time and so you keep being a good borrower.
  • Financial issues are the biggest cause of stress and replacement income comes as a sigh of relief as it does not add to the worries of coping with the financial issues.
  • It gives you the liberty to take the time required to completely recover from the illness and need to require you to hush to the office even when not completely cured.

What are the documents required to show that you are self-employed?

  • The income protection insurance gives almost the same benefit whether employed or self-employed and the main difference lies in the fact that how you prove your net income. For sole traders, they may be asked to show proof of their net profit, like your 12 months earnings or average earning in previous 3 years.
  • For limited companies directors they will get the cover for their salary plus dividend payments and on P11D benefits if they have. Some insurers may not take into account dividends.
  • In case of partnership, you will have to show your share in the net profit of the company.