For many self-employed people, flexibility and independence are some of the biggest advantages of running your own business. Being your own boss and working on your own terms can be incredibly rewarding, but it also comes with additional financial responsibilities and fewer safety nets if something unexpected happens.
Unlike employed workers, self-employed people are not entitled to Statutory Sick Pay. If illness or injury stops you from working, your income could stop too.
At Gordon Anthony Mortgages, we regularly speak to business owners, contractors and self-employed professionals looking to better understand how protection policies work and what options may be available to them.
Why many self-employed people continue working when unwell
Research has found that self-employed people take significantly fewer sick days than employed workers, often because of concerns around lost income and financial pressure.
While this is understandable, continuing to work through illness or injury can sometimes have a longer-term impact on both your health and your business.
Having suitable protection in place can provide financial support if you are unable to work, helping reduce some of the pressure during difficult periods.
What is income protection insurance?
Income protection insurance is designed to provide a portion of your income if you are unable to work due to illness or injury.
Policies will typically pay between 50% and 70% of your income in regular monthly payments. Payments can continue until you are able to return to work, retire, or reach the end of the policy term, depending on the cover selected and policy conditions.
Unlike critical illness cover, which usually pays a one-off lump sum for specified serious illnesses, income protection can cover a wider range of medical conditions, including both physical and mental health conditions. As with all insurance policies, conditions and exclusions will apply.
Why income protection can be particularly important for self-employed workers
If you are self-employed, your income may depend entirely on your ability to work.
This can affect:
- Mortgage payments
- Household bills
- Business expenses
- Rent or office costs
- Family finances
- Existing financial commitments
Income protection can help provide ongoing financial support during periods where you may be unable to earn as normal due to illness or injury.
Understanding the deferred period
When arranging income protection insurance, one of the key considerations is the deferred period. This is the amount of time between stopping work and when benefit payments would begin.
Because self-employed individuals do not receive Statutory Sick Pay, some people may choose a shorter deferred period to access support sooner. However, shorter deferred periods can often result in higher premiums.
The right option will depend on your personal circumstances, savings and how long you could comfortably manage without regular income.
Your occupation can affect your cover
The type of work you do can influence the level of cover available and the cost of premiums.
For example, occupations involving physical labour, working at height or operating machinery may be viewed differently by insurers compared with office-based professions.
When applying for cover, insurers will usually ask detailed questions about:
- Your occupation
- Working environment
- Duties and responsibilities
- Income
- Medical history
It is important that all information provided is accurate and complete, as incorrect information could affect future claims or invalidate a policy.
What about limited company directors?
If you are a director of your own limited company, executive income protection may also be worth exploring.
Executive income protection policies are typically arranged through the business and can provide cover for directors or employees in the event of illness or injury.
This can be a tax-efficient way for some businesses to arrange protection, although suitability will depend on individual circumstances and professional advice should always be sought.
Income protection and pre-existing medical conditions
Some insurers may place exclusions on pre-existing medical conditions, while others may offer cover with adjusted terms.
This will vary depending on:
- The condition
- Your medical history
- Current treatment
- Time since diagnosis
- Individual insurer criteria
Understanding exactly what is and is not covered is an important part of reviewing any protection policy.
Mortgage advisors in Manchester helping you understand your options
At Gordon Anthony Mortgages, we help clients across Manchester, Rawtenstall, Burnley, Accrington and the wider North West understand the protection options available alongside their mortgage and financial commitments. As mortgage advisors in Manchester, we can help explain how income protection works, answer your questions and help you explore policies that may suit your circumstances.
Frequently asked questions about income protection for self-employed people
Can self-employed people get income protection insurance?
Yes, many insurers offer income protection policies for self-employed workers, contractors and company directors, subject to eligibility and underwriting.
How much does income protection pay?
Policies typically provide between 50% and 70% of your income, although this varies depending on the insurer and policy selected.
Does income protection cover mental health?
Many policies can include cover for mental health conditions as well as physical illness or injury, subject to policy terms and exclusions.
Is income protection the same as critical illness cover?
No. Critical illness cover usually pays a lump sum for specified serious illnesses, whereas income protection is designed to provide regular monthly payments if you are unable to work.
Can directors of limited companies get income protection?
Some limited company directors may be eligible for executive income protection policies arranged through their business.
Here to help
If you are self-employed and would like to better understand your protection options, Gordon Anthony Mortgages is here to help.
Whether you are looking for a mortgage broker in Manchester or want to explore income protection alongside your mortgage arrangements, our team can help explain your options in a clear and straightforward way.As with all insurance policies, conditions and exclusions will apply.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The cost of this insurance depends on several factors, such as your age, where you live and your occupation. As a result, the cost you will pay is based on your own circumstances