Income Protection Insurance for the Self-Employed and Contractors

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Income Protection Insurance for the Self-Employed and Contractors

Being self-employed or working as a contractor can be highly attractive with the ability to work flexibly and be independent. However, while there are many benefits to being your own boss, you do not have access to employee benefits such as job security and reliable income. Therefore, with the possibility that you may not have a stable income it could be beneficial for you to take out income protection insurance.

Can Self-Employed Workers and Contractors get Income Protection?

Yes they can. There are many insurance providers who offer specific income protection insurance for self-employed workers and contractors with some providers offering standard income protection which covers them as well.

However, it may be more difficult for you to get income protection if you are self-employed or a contractor as your income may not be consistent each year. But it can be worth it to have the cushion should you find yourself unable to work. Despite it being more difficult, the friendly team here at The Mortgage Genie can provide you with the best advice and help you find the best quote for your situation.

The Importance of Income Protection for the Self-Employed

Employees of a company may benefit from perks such as sick pay, redundancy pay and secure income. These are not available for those who are self-employed. Therefore, should you find yourself unable to work due to sickness or injury, you would not have any income.

Income protection insurance covers you so that should you find yourself unable to work, you would not be without income and would be supported during your difficult time.

This income protection would allow you to maintain your mortgage and other loan repayments as well as supporting your dependents, providing security in your home for both you and your family.

What About Contractors? Why Does Income Insurance Matter?

Most contractors, like self-employed workers, do not have access to employee benefits such as sick pay. If you have bills, mortgage payments or loan repayments which you rely on your income to be able to afford, then income protection can support you.

Many income protection insurance providers stipulate that in order to be eligible for income protection you need to have worked in your job for 12 months. This excludes contractors as many jobs which contractors do last less than a year. Alongside this, many contractors don’t take on 12 month contracts due to IR35. This refers to two sets of tax legislation which can tax contractors up to 25% more if they are effectively employees or ‘deemed employees’ but working through a limited company.

However, there are many insurance providers who offer specific insurance for contractors. Therefore, if security for your dependents or family is a main concern, then contractor income protection will cover you and provide you with peace of mind. Some providers will also cover death-in-service payouts which will help support your dependents should the worst happen.

How does Self-Employed Income Protection work?

There are multiple types of self-employed income protection. You can take out cover which will insure you for the long-term, or you can pay for short-term cover if you are facing temporary difficulties. As long as you keep up with payments, you will be covered for the duration of your policy.

There are specific options for self-employed income insurance:

Self-employed sickness insurance: This insurance will pay out if you are unable to work due to illness. You can get short-term protection which covers less serious illnesses, or you can take out long-term protection which covers more serious illnesses. You can choose whether this insurance replaces your income or pays you statutory sick pay.

Self-employed injury insurance: This insurance will pay out if you are unable to work due to injury.

Self-employed sickness and injury insurance: This insurance provides cover for both sickness and injury. It is effectively a combination of the two insurances above.

Loss of income can be daunting for everyone but it is especially daunting for those who are self-employed. Self-employed income protection ensures that you do not have to worry if you find yourself unable to work.

How does Contractor Income Protection work?

Contractor income protection works similarly to self-employed income protection. Should you fall ill or sustain an injury, your insurance will pay out monthly up to 70% of your income. This is available for both long and short-term.

You can be covered if you are a sole trader or the director of your own limited company. This allows you to support yourself and your dependents during a difficult time.

How much will I Pay for Self-Employed and Contractor Income Insurance?

How much you pay for your insurance depends on a number of factors:

How much you want the policy to pay out: In order to know how much you need your insurance to pay out, you need to work out how much you would need to cover your mortgage and loan repayments, food and childcare etc. This is so that should you find yourself without work, all your necessities would be covered. The more you would need from your insurance, the more you will pay for your policy.

Long or short-term policy: Typically, short-term cover is more affordable than long-term cover. However, there is the possibility that your short-term policy would not cover you should you find yourself ill after it had ended. Long-term cover, although more expensive, could guarantee you cover until you retire as long as you keep up with payments.

Age and health: Your age and health will affect your premium as the older you are and the more health conditions you have, the more likely it is that your insurance would need to pay out. If you have a long-term health condition you will have to pay more, or your insurance provider may offer you cover excluding the condition, meaning incidents related to this condition would not be covered, but your insurance would cost less.

How long the waiting period is: The waiting period refers to how long you would wait between being off work and claiming on your insurance. It is also known as a deferred period. The longer your waiting period, the cheaper your policy will be. However, you will not be provided with any cover until after your waiting period is over. The waiting period can be anywhere between 1 day and 12 months.

How high risk your job is: if you have a high risk job, then your policy will be more expensive as the likelihood of your insurance needing to pay out increases.

Here at The Mortgage Genie, we are committed to providing you with personalised, helpful advice. We understand that income protection, especially for those who are self-employed or contractors can be extremely important for peace of mind. Contact us today for a no-hassle quote.

If you are worried about more serious illnesses affecting your ability to work, then you may want to consider Critical Illness Cover. If you would like to take out insurance which solely protects your mortgage payments, then you may wish to take out Mortgage Payment Protection Insurance. No matter what type of protection you need, The Mortgage Genie and our friendly team can help you find the best insurance for your personal situation.

Company Information

The Mortgage Genie Limited is Registered in England and Wales with Company Number 9803176. The Mortgage Genie Limited is an Appointed Representative of PRIMIS Mortgage Network, a trading name of First Complete Ltd. First Complete Ltd is authorised and regulated by the Financial Conduct Authority. Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority. The guidance contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.


Depending on the complexity of your mortgage there may be a fee for our mortgage advice and arrangement service, which will be discussed and agreed before you make a mortgage application. A typical fee is £293 and will never be more than 1% of the mortgage amount.