Plan Insurance Blog

Do You Need Life Insurance, Critical Illness or Income Protection if You’re Self-employed?

How many of you dreamt of becoming the next big business tycoon during lockdown? Well, whether you have only recently started a new business venture or if you’ve been self-employed for years, we have summarized the must-have life insurance policies for modern self-employed people here.

As your own boss, you are not entitled to some of the same benefits as traditional employees, which means missing out on perks such as maternity leave, sick pay, and death-in-service. Life insurance should be a priority whether you are working for yourself or not, however, being self-employed does entitle you to worry a little more about insurance than those in traditional employment. Amongst all of the perks that come with being self-employed, like being your own boss, flexible working and more control over your finances – working for yourself can leave you wide open to potential financial downfalls.

At Plan we partner with Caspian Insurance to offer an extensive range of Life Insurance products. We also collaborate with J.Osborne Healthcare to source Critical Illness Insurance from a wide array of leading suppliers.

Level term life insurance for self-employed people?

Level term life insurance is a fixed-term policy, meaning that the amount you are covered for and the term length stays the same throughout the policy. This policy would pay out a lump sum to your beneficiaries (the people you would like to receive the money) upon the death of the policyholder (you).

As with any form of financial protection, there are a myriad of factors that will be considered in order to calculate both the amount of cover you will need and thus the monthly premium you will pay. You will need to answer various questions about your health, lifestyle, and occupation. From this information, your monthly premiums will be calculated.

Level term life insurance is one the simplest forms of financial protection and thus a popular option for a lot of self-employed people as you can tailor it to your preferences. The protection specialists at Caspian will run through all the different elements of any policy type they recommend and recommend the best policy for you based on your personal and financial needs.

Why critical illness insurance?

No one knows what is around the corner. The unexpected can happen at any time and this is why critical illness cover should not be overlooked when looking at financial protection.

Whilst we hope that you won’t ever need to use it, critical illness insurance is not only advantageous as a standalone policy but when coupled with a life insurance policy, you get two types of protection in one.

A critical illness policy could financially protect you and your loved ones in the event of the policyholder (you) being diagnosed with a critical illness that comes under the list of specified illnesses that your policy covers during your term length. With this type of policy, in particular, it can pay out a lump sum whilst you are still alive. Meaning many people use this type of policy to fund their bucket lists in the event of being diagnosed with a terminal illness.

What is income protection insurance?

As a self-employed person, are you worried about missing out on sick pay? If so, then an income protection policy could be right for you.

In simple terms – an income protection policy pays out a selected percentage of your income each month if you were unable to work due to illness or incapacity. The monthly payments you would receive could help contribute towards any regular outgoings you may have such as rent and bills. This is a long-term policy and the protection specialists at Caspian typically recommend an income protection insurance policy to cover you until the state retirement age, ensuring that you are financially protected throughout your working life.

The two main factors that your protection specialist at Caspian will explain the importance of is your deferral period and the percentage paid to you each month. The deferral period is a fixed period that needs to pass before your monthly payouts begin. For example, if your deferred period was four weeks, you would have to be unable to work for a block period of four weeks before your monthly payments start. The percentage of your wage that you would receive each month is typically 50-70%, however, you can change this percentage with your Caspian specialist. It is also worth noting that the monthly payments are also free of income tax!

As your own boss, you’re no doubt well aware that you’re not entitled to some of the benefits of traditional employees. One of the biggest worries of working for yourself is the potential ups and downs in your income. An income protection insurance policy can protect your income if you were to suffer from illness or injury. This type of policy is hugely beneficial if you do not have sick pay which, if you are self-employed, is unlikely. This policy would help you protect yourself and your family from financial burden if you were to suffer from long term illness.

How to choose a life insurance policy if you are self-employed

As with any financial commitment, doing your research is vital to forming your own understanding of what is available to you. However, with modern life insurance products becoming more comprehensive it is also crucial to seek out the advice of experts who can offer a knowledgeable perspective on your financial needs. At Caspian, they offer free impartial advice to find you the most suitable cover for your needs. They work on a fully advised basis which means they will search the market for you, take all of your circumstances into consideration and recommend the best policies to you.

Just like we understand the time and work that it takes to grow and develop any business we also understand your time is precious, so sorting your life insurance shouldn’t feel like a burden. Let the team at Caspian do the hard work for you so you can go back to investing in your future.

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