How long do i need to be self employed to get income protection?
Question asked by Peter Brain
Are self employed entitled to statutory sick pay? What are my benefit options as a self employed worker if I am sick or injured and unable to work?
One of the downsides of taking charge of your career and being self-employed is that you’re not entitled to Statutory Sick Pay from an employer if an illness or injury prevents you from working.
This means self employed professionals will need to rely on their savings and/or take out appropriate insurance. Or you’ll need to apply for other government benefits.
Previously, self employed people who were unable to work or were forced to reduce their hours may have been able to claim Employment and Support Allowance (ESA) or Income Support.
However, the new Universal Credit scheme has turned the old benefits system on its head. It’s gradually being rolled out across the country, and the benefits you were once able to claim separately are now lumped together under the name of ‘Universal Credit’.
Universal Credit payments now include:
When applying for Universal Credit, it can take up to 5 weeks to receive your first payment. In some unfortunate cases, it has taken longer than 5 weeks for claimants to receive their payments.
Government benefits aren’t the only solution for you if you’re self employed without sick pay or adequate savings to meet your financial commitments.
There are two useful insurance products that can give you financial support if an illness or injury prevents you from working.
Self Employed Income Protection is a policy you can use to protect your income if you’re unable to work as a result of injury or illness. With this, you can claim up to 70% of your regular income in the form of monthly benefits.
Unlike Critical Illness Cover, Income Protection will cover any health problems you have as long as it prevents you from working. A definition of incapacity is used to determine whether you;re entitled to claim on your policy, with different incapacity definitions used to adjust the comprehensiveness of your cover.
Make sure you have the own occupation definition. You’ll be able to claim as long as your health problem prevents you from working in your specific role.
Policyholders can also decide on the maximum length of their claims. Choosing Long Term Income Protection allows you to claim these benefits until you reach retirement age if you need them. While Short Term Income Protection will pay out for a maximum of only 2 or 5 years.
Critical Illness Insurance pays out a tax-free lump sum if you’re diagnosed with a critical illness listed on your policy.
The number of conditions that insurers cover can range anywhere between 40 and 100. Although the quality of a policy can be found in the definitions of critical illnesses covered by the policy rather than just the number.
One of the main weaknesses of Critical Illness Cover is that it only covers a set number of illnesses, leaving you unprotected for many conditions not listed on the policy.
To protect your income while you’re unable to work, we would recommend Income Protection to replace a lack of sick pay. It can cover your essential outgoings and can be claimed for any type of health problem that meets your policy’s definition of incapacity.
Applying for Income Protection when you’re younger can help you save money on your policy. The cost of Income Protection depends on your risk of claiming, so young, healthy policyholders who don’t smoke will pay a lot less for their policy than someone older and perhaps not in great health.
Policyholders can also lock in the cost of their policy by choosing guaranteed premiums. Guaranteed premiums are fixed at the start of your policy and wont’ change unless you adjust your cover.
We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.