Protection Guide
Income Protection for Self-Employed
If you’re self-employed, getting ill or injured doesn’t just impact your health — it can impact your income overnight.
And without employer sick pay, that can feel pretty exposing.
Income protection is designed to replace a portion of your earnings if you can’t work due to illness or injury —
helping you keep up with the mortgage/rent, bills, and everyday life while you recover.
Quick takeaways
Income protection pays a monthly benefit if you can’t work due to illness or injury.
For self-employed people, it can replace the income you don’t get from employer sick pay.
You choose how long you can wait before it pays out (the deferred period).
The “best” policy is the one that matches your income, savings buffer, and real monthly outgoings.
What is income protection?
Income protection is an insurance policy that pays you a regular, tax-free income if you can’t work due to illness or injury. Unlike critical illness cover, it doesn’t just pay out once; it keeps paying until you’re well enough to return to work or the policy ends. For the self-employed, this can be a lifeline, because you don’t have access to employer sick pay schemes.
In simple terms: if you can’t work, it helps keep money coming in.
Why it matters (especially if you’re self-employed)
No employer benefits
Most self-employed people don’t have employer sick pay, so if you can’t work, your income can drop sharply — even if your outgoings stay the same.
Bills don’t stop
Mortgage, rent, utilities, food, childcare… life carries on. Income protection is about keeping the basics covered while you recover — so you’re not forced into bad decisions.
Health risks are unpredictable
Most claims happen because of everyday illnesses and injuries — not dramatic accidents. The point is having a plan in place before you ever need it.
Family security
If other people rely on your income, income protection can be the difference between “tight for a while” and “financially derailed”.
How income protection works
The cover is built around a few key choices. These are the levers that shape what you pay and what you get back.
Choose your cover level
Typically around 60% of your income (to reflect take-home pay after tax).
As a self-employed individual, it's likely that your monthly income fluctuates. So, when deciding on your level of cover, you'll need to be clear on what essential expenses would continue if you couldn't work (think mortgage/ rent, utilities, food, childcare etc.).
Set the deferred period
This is how long you wait before the policy starts paying out — for example 4, 8, 13, 26 or 52 weeks. Longer deferred periods usually reduce the premium.
Decide how long you want it to pay
You can choose a benefit period (for example 1–2 years) or cover that runs until a chosen age. The right choice depends on your budget, savings and how you’d cope if you were off work long-term.
Define “can’t work” properly
Different policies define incapacity differently (for example your own occupation vs a more general definition). This is one of the most important details — we’ll explain it in plain English before you decide.
Premiums depend on:
- Your age - the older you are at the time of applying, the higher your premium will be.
- Your health - your premium may be higher if you have pre-existing health conditions or significant medical history.
- Type of job you do - if your job is deemed to be 'risky' (i.e. injury is more likely) then your premium will reflect that.
- Smoking status
- Length of deferment period
- Length of cover
FAQs
Mental health is commonly included in income protection, but cover isn’t automatic. If you’ve had mental health symptoms, treatment, or time off work in the past, insurers may review this and apply exclusions or conditions to the policy. We’ll explain these clearly before anything is put in place, so there are no surprises if you ever need to claim.
You choose. Some cover pays for a fixed period (e.g. 12 or 24 months), while other policies can pay until a selected age. What’s best depends on your safety net and budget.
It depends on your business type and the insurer. Sole traders often use net profit, and limited company directors may use a mix of salary/dividends. We’ll help you evidence income in a way that fits the insurer’s underwriting rules.
Need a hand?
Tell us a bit about your work and your outgoings, and we’ll recommend a sensible structure (without overcomplicating it).
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Insurance policies may have exclusions and limitations. Always check suitability and policy terms before proceeding.
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IMPORTANT: With investments, your capital is at risk. Pensions and investments can go down in value as well as up, so you could get back less than you invest.
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