Self employment gives you freedom. You can choose your hours, your location, and your income. It can be a hugely rewarding way to work, but it also means you take on more responsibility and risk. Unlike employees, you are not entitled to sick pay, a company pension, or benefits. That makes it even more important to plan ahead and protect your finances.
Illness, injury, or worse can have a serious impact if you are self employed. Without the usual safety nets, it is up to you to make sure you and your family are financially secure. This means factoring protection into your business planning and adjusting your pricing to cover the cost.
The good news is that there are several types of insurance designed to support self employed people. In many cases, you can pay for cover through your business, making it a tax efficient option. This guide outlines the main areas of financial protection to consider, whether you are a sole trader, freelancer, or contractor.
Life Insurance
Life insurance gives your family a lump sum if you pass away. This money can help cover essential costs like mortgages, education fees, or business debts. Unlike employees, self employed people are not entitled to death in service benefits, so having life cover in place can offer important peace of mind.
Things to consider:
Sum assured – The amount paid out if you pass away
Policy term – You can choose a fixed number of years or a whole of life policy
Premiums – These can be guaranteed (stay the same) or reviewable (may change over time)
Joint cover – Couples can take out joint policies that pay out on the first or second death
Trusts – Placing your policy in trust helps make sure the money goes to your chosen beneficiaries and can avoid inheritance tax
You can choose between personal life cover or business life cover depending on your situation.
Personal protection means you pay for the policy from your personal account and the money goes directly to your beneficiaries or into a trust. These policies can also be more flexible and may include extras like critical illness cover.
Business life protection includes options such as:
Key person cover – Supports the business if a key individual is unable to work
Shareholder protection – Lets remaining shareholders buy the shares of someone who has passed away
Critical Illness Cover
Critical illness insurance pays out a lump sum if you are diagnosed with a serious health condition.
The payout can be used in a number of ways:
To cover your usual living costs while you recover
To pay for private medical treatment or support services
To make changes at home if needed, like installing mobility aids
Without paid sick leave, this type of cover can be especially important for people who work for themselves. It provides a financial buffer during recovery and helps prevent a health issue from turning into a financial crisis.
Income Protection
Income protection insurance pays you a regular income if you cannot work because of illness or injury. It is one of the most important types of cover for the self employed, who are unlikely to qualify for sick pay and may find state benefits do not go far enough.
Key features to look for:
Deferred period – The length of time you need to be off work before the payments begin
Cover amount – You can choose level cover (same amount throughout) or increasing cover (rises with inflation)
Own occupation cover – This means you will get a payout if you cannot do your own job, even if you could do another role
Cover length – You can choose short term (up to five years) or long term (until retirement)
This type of cover can help you stay on top of your bills and protect your business if you are unwell for an extended period.
Private Health Insurance
If you are self employed, delays in treatment can directly affect your income. Private health insurance gives you quicker access to doctors and hospitals so you can recover and return to work sooner.
Key things to note:
You can often choose your doctor, hospital, and treatment times
Some policies let you access private facilities and specialists
You usually pay an excess or contribution toward your treatment
Most policies do not cover emergencies, long term conditions, or pre existing conditions
Building Financial Resilience
Insurance is important, but it is not the only way to protect yourself financially. Here are a few other practical steps:
Build an emergency fund – Aim to save at least three to six months of living expenses
Stay healthy – Eating well, exercising regularly, and managing stress all reduce the risk of illness
Invest in your skills – Keeping your skills up to date and offering a range of services can help you stay in demand
Taking care of your overall financial wellbeing is just as important as having the right insurance.
How Osborne Financial Can Help
At Osborne Financial, we understand that self employment requires a different approach to financial planning. Our team offers expert advice and tailored insurance options to help protect what matters most to you.
We work with you to understand your personal and business needs and recommend the right cover to match. From life and critical illness cover to income protection and private health insurance, we make sure you are supported at every stage.
If you would like to speak to one of our advisers, please contact us through our website. We are here to help you build a strong financial plan that protects your income, your business, and your family.
The information provided on the pages, blogs, and articles contained within this website are solely for information purposes only and do not constitute financial advice. Professional advice should always be sought from a financial adviser.
