Self Employed Income Protection Insurance Cover

Self employed people don’t get sick pay and because benefits from the Government are nothing more than a token gesture it is important to take out an insurance policy that will provide cover for income in the event of a sickness, accident or disability.

When it comes to short term sickness cover there is income insurance available but it comes at a price and is not always ideal.

This is usually Accident & Sickness cover which will only pay a claim for 12 or 24 months. It is NO GOOD for long term income protection in the event of a serious illness or accident.

It can be slightly cheaper than long term solutions but can also sometimes be more expensive.

Long term self employed income protection comes in the form of Permanent Health Insurance (PHI). This will pay a claim for as long as the policy is set up for.

A 25 year policy could pay a monthly amount for 25 years if a claim is made in the 1st year which is a much better solution for serious illnesses, accidents or disability and could even be used to pay off a 25 year mortgage.

This type of income protection can even be set up to provide cover up to retirement age of 65.

Permanent Health Insurance is underwritten in the same way as life insurance and so the price can be affected by existing illnesses or hazardous occupations.

The cover can be set up to increase in line with inflation so that if the cost of living goes up the amount of cover also goes up.

To have cover that starts paying out straight away it costs more than if the benefit payment is deferred for 3 or 6 months (this means no money will be paid in the first 3 or 6 months, whichever is chosen).

It is ALWAYS a good idea to have some rainy day savings that could last between 3 to 6 months or some critical illness cover that could pay a lump sum in the event of a serious illness or disability.