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Insurance Requirements for the Self-employed

Insurance Requirements for the Self-employed


If you’re already self-employed or are thinking about taking that route, there are a few things you’ll have to think about putting in place for your own wellbeing. Without an employer to rely on for sickness pay and health insurance, you’ll need to take this out yourself, and this guide will help you work out what you need.

Although you aren’t legally required to have these insurance policies, they’re all still worth considering if you work for yourself. In the event that something happens to you and you’re unable to work, you’ll want to be sure that your dependents can cover the cost of your funeral and are cared for afterwards.

Income protection insurance

If you’re sick or injured and therefore unable to work, income protection insurance will financially support you over this period. This is sometimes known as permanent health insurance and will replace part of your income until you start working again, until you retire or until the end of the policy term – whichever of these comes first. Most illnesses that mean that you’re unable to fulfill your role are covered by this, and you’re usually able to claim as many times as you need to throughout the policy term.

Whichever policy you choose, the amount you pay each month will depend on a few things including your age, your occupation, whether or not you smoke, the illnesses and injuries that are covered and your overall health both now and in the past.

Critical illness cover

Unlike income protection insurance, critical illness cover will pay you one lump sum (tax-free) if you are diagnosed with a serious illness that is covered by your policy. Although often confused, this type of policy is different to life insurance, but the two are sometimes sold together. Examples of critical illnesses that might be included are heart attacks, certain types and stages of cancer, strokes, illnesses and conditions such as multiple sclerosis. Most also consider permanent disabilities as a result of injury or illness and some will make smaller payments for less severe conditions. Be aware that a critical illness policy will only pay out when the policy has ended.

Private medical insurance

While it’s true that a lot of your healthcare needs will be met by the NHS, private medical insurance can supplement this quite well. It will also mean that you won’t have to wait on lengthy NHS waiting lists, guarding you against any loss of earnings. Opting for a basic private medical insurance will usually cover the cost of basic in-patient treatments and day-care surgery. More costly policies will cover out-patient treatments like specialists and consultants, and for any nights that you need to spend in an NHS hospital.

Here’s a list of things that aren’t covered by this insurance:

  • Organ transplants
  • Pre-existing medical conditions
  • Pregnancy and childbirth costs
  • Cosmetic surgery
  • Injuries sustained from a dangerous sport or war-like hostilities
  • Chronic illnesses

Some policies do cover the costs for mental health care and sports injuries so it’s worth looking into this if you think it may be beneficial to you.

Life insurance

If you die, life insurance will mean that your insurance provider will pay your dependents money in regular payments or as a lump sum. Having this in place means you’ll be provided with the reassurance that your spouse and children will be financially stable when you’re no longer there to provide. There are two main types of life insurance:

Term life insurance

This will run for a fixed amount of time or the ‘term’ of your policy (usually 5, 10 or 25 years) and will only pay out if you die during the policy. If you live past your chosen policy term, you won’t receive any payment.

Full life insurance

This policy will pay out no matter when you die, as long as you keep up with your payments. Opting for a full life insurance policy will mean your regular payments will cost more.

Usually, any type of life insurance only covers death and will not care for your family if you have an illness or disability. Some policies do provide a ‘terminal benefit’ that will pay out if you’re diagnosed with a terminal illness so you should always check the terms and conditions of your policy before you commit.

How to compare the best quotes

Insurance policies can start from as little as £5 a month, but it all depends on the amount of cover you want. Comparison websites such as Call Wiser can help you find the best deal for your requirements, always making sure to take into account things such as your age, occupation and overall health.