SELF EMPLOYED INCOME PROTECTION INSURANCE

Protect yourself

SELF EMPLOYED INCOME PROTECTION INSURANCE

Protect yourself

What Is Income Protection Insurance?

Income protection is a type of insurance that provides an income for people who are unable to work due to illness or injury. When they’re not able to go to work, the policy provides part of their salary so that they can cover their expenses until they’re able to return to work.

It differs from similar policies in that payments aren’t made as a one-off lump sum, but rather regularly until the payments are no longer needed.

Who Is Income Protection Insurance For?

Essentially, the insurance is designed to support people who would struggle to pay their bills in case of an injury or illness. While all types of self-employed individuals are covered, who rely on their ability to bring in an income to support themselves. Income protection insurance covers most things that would leave you unable to work, offering peace of mind that you’ll have an income even if you need to temporarily stop working.

What are The Different Types are there?

There’s more than one type of income protection policy available. There is short-term income protection, which is paid out over a set, limited period (usually until a maximum of two to five years), and is used as a temporary measure against reduced income. Long-term income protection insurance is, as the name suggests, a long-term policy that covers you until retirement. The cost of the policies and the amount of money they pay will differ, depending on the type of insurance you take out.

Who Doesn’t Need Income Protection Insurance?

You may not need income protection insurance if you have savings to fall back on should you find yourself unable to work. Equally, self-employed individuals who work for companies that offer comprehensive, long-term sick pay are unlikely to need it. Essentially, if you know that you’d always be able to pay the bills if you fell ill, whether that’s thanks to savings, your employer, friends and family, or other funds, then it’s not for you.

What Affects the Cost?

The cost of the policy will be calculated depending on your individual circumstances. The starting point will be your age, income, your lifestyle (for example, if you’ve ever smoked/how many units of alcohol you consume each week, and so on), and your health (including any present or past medical conditions that you or your family have or had). From there, it gets more policy specific. For example, the amount of your income that you want to have covered, the length of time you want to receive payments, and the ‘waiting period’ between your falling ill and when payments begin.

While it won’t replace a full income, income protection insurance is a useful service for people who would struggle to make ends meet in the event of being unable to work.

Self Employed Income Protection insurance is a serious matter, and here at Active Mortgage highly recommend that if you are thinking about this kind of policy, then you speak to one of our in house advisers as soon as possible. You can do this by calling 01245 850165 or contacting us here.

These articles are for information only and no advice should be conferred from the content within. Please seek independent financial advice prior to taking any action.

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