Self Employed Income Protection – Long Term & Short Term Accident & Sickness Insurance Cover

Self employed people do not receive any employee benefits when they are off sick or are unable to work because of an accident so it’s important to arrange income protection insurance.

Benefits from the Government are minimal and Statutory Sick Pay is currently a meagre £79.15 per week or £343 per month which is barely enough to feed a family of 4 let alone pay a mortgage, heating and electricity bills or any other loans.

Therefore, self employed people need to arrange income protection for themselves that will cover important expenses if they are off work due to sickness or accident.

Income protection is not designed to replace a self emplyed persons income entirely but it is designed to replace a reasonable amount to make sure a reasonable standard of living can be maintained.

Long Term Cover

Long term income protection cover is also known as Permanent Health Insurance and is the most suitable solution for self employed people who have no sick pay but do have long term liabilites like a mortgage or a family that needs supporting. Income protection can even be used by employed people who only receive sick pay for a few months.

This type of cover can provide a monthly benefit for the full term of the policy.

If a claim is made in the very first year of a 25 year policy the monthly benefit could be paid for the remaining 24 years which is why this type of income protection would be ideal for a self employed person with a mortgage which could be repaid from the proceeds of a claim for the full term of the mortgage.

Multiple claims can also be made throughout the life of the policy.

Permanent Health Insurance can also be combined with life and critical illness cover to reduce the overall cost of protection.

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Short Term Cover

Accident & Sickness cover is often sold as ‘Accident, Sickness & Unemployment’ (ASU) cover.

As a self employed person, having unemployment cover is impractical and potentially pointless because it may not be possible to make a claim unless also eligible to claim Jobseekers Allowance which involves ceasing work as a self employed person.

Accident & Sickness cover can however be purchased without unemployment cover and is often cheaper this way.

Accident & Sickness policies will pay a monthly income benefit for up to either 12 or 24 months. Once the policyholder returns to work or the 12 or 24 months is up, the payments will stop but after the policyholder has been back to work for 6 months they can claim again if something else happens.

Some specialist policies can be for a longer term such as 25 years. The maximum benefit payment will still be 12 or 24 months but after a claim the policy will stay in place. These specialist income protection policies can be combined with life insurance and critical illness cover to bring the total cost of cover down.

This type of policy wold not be suitable for a serious or long term illness.

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