Working for yourself can have many benefits – independent decision making, flexible hours, the ability to work from home – but it can also leave you financially vulnerable. That’s why the self employed women of the UK need income protection.
How does self employment differ to being employed?
Financially, there a number of ways that being self employed differs to being in the employment of someone else’s company. For starters, self employed women need to manage their own taxes, rather than being taxed at source in their monthly wages.
A lesser known impact of being self employed is that workers need to take out their own provision for sick leave, to protect themselves financially if they are unable to work.
Do self employed people get any government help if they can’t work?
While there is basic support available from the government for those that are unable to work through illness, this is very limited – and often not sufficient to survive on.
The problem for self employed people is that they are not entitled to the same statutory sick pay that they would receive if they were in the employment of a larger organisation, simply because they are their own boss!
This may not be a problem if they have to take a few days off for a bout of flu or food poisoning. However, any long-term health issues can have a significant impact on their household finances.
While nobody likes to think about suffering an injury or illness that renders them unable to work long-term, it is far better to put provisions in place while all is well than have to face the consequences when they are battling with bad health.
How can self employed people protect themselves in the event of injury or illness?
The easiest way for self employed people to safeguard their financial wellbeing in the event of serious sickness or injury is to take out income protection cover.
Income protection insurance covers self employed workers if they find themselves in a situation where their health prevents them from working. Usually paid monthly, this will relieve some of the stress of being signed off sick, enabling self employed workers to live a relatively normal financial life until they are well enough to return to work.
How much does self employed income protection insurance pay out?
The exact amount that self employed workers are entitled to under an income protection policy will depend on a number of factors. These include the terms and conditions of the policy, and their average earnings before falling ill.
It is worth noting that most income protection policies do not pay out for a number of weeks after being taken out, in order to stop self employed people rushing to take out insurance after they have fallen ill – so this is something that should be thought about in advance.
Other things to look out for include policy wording, as not all illnesses and injuries are covered as standard, while some will require policyholders to take another, suitable occupation if available rather than receive ongoing support based on the fact they cannot do their original job.
It is also worth mentioning that some self employed income protection policies will include limited cover for periods of unemployment.
The best way for self employed people to ensure that their financial future is protected is to carefully research the products available on the market. This way, you can put plans in place to ensure you don’t have to dip into your savings should you suffer a spell of ill health.
If you need some help with your insurance arrangements, contact us today, we’ll be happy to help you or work with your accountant.