Are you covered? Personal insurances for the self-employed

There are a lot of perks to being self-employed. You get to be your own boss – and avoid dealing with annoying ones. You control your own time and priorities. But the flip side of freedom is greater risk.

If a disaster or big life change hits you, you are on your own. There is no maternity or paternity leave or pay, no sick leave, no death in service benefits, no paid holiday leave and no pension. Not, that is, unless you plan ahead and make provision for it.

All that bureaucracy and form-filling doesn’t fit quite so well with the exhilaration of freelance freedom. Insurance can be complicated and you’ll also need to do your homework and make sure you thoroughly understand the implications of your policies. But one day you will definitely be thankful that you put in the effort. Here are the key policies to consider: 

Life insurance

If you have dependants should be a no-brainer. Life insurance is often provided by employers, so it is even more important that you sort out your own life insurance if you are self-employed. It is usually quite inexpensive. There are two types: term insurance, which covers a set period (often until your mortgage is paid off); or whole-of-life insurance which lasts until you die, as long as you keep up the payments.

Critical Illness

This provides a payout if you are hit by a serious illness. The list of illnesses is restricted, usually including some cancers, heart attacks, and strokes. It doesn’t include chronic conditions like back problems and stress.

Income protection

This should help with replacement income if you are incapacitated by accident, sickness and unemployment. These policies are expensive though and can be tricky in terms of exemptions. They usually have a period of 3-6 months before they start paying out.

Private medical insurance

Sadly, given the growing NHS waiting lists, this may be worth considering for yourself and key employees to guard against lost earnings if you have to wait a long time for treatment.

Figuring out the stipulations 

It is important that you go through the stipulations and exclusions in the policies that you are considering. There are blatant things to look out for, like self-employed people being excluded from some Income Protection policies!

Are there certain injuries or illnesses that your health insurance does not cover, or is it inclusive of everything? How much of your treatment costs will the insurance company cover and how much would you have to pay? 

To understand the benefits 

For life insurance cases, you need to make sure that your beneficiaries can collect the money, and whether or not there are conditions that might stop that from happening. Can you forego your life insurance policy and get a life settlement?  

It’s important to consider how different insurance policies can impact you. And if so, do the beneficiaries still get anything? Does your health insurance cover psychiatrists and mental illnesses? Mental health can be just as important as cardiovascular health.

Avoiding breaches 

As a self-employed individual, it falls on you to cover all insurance costs. So, you can’t really afford to breach any terms and conditions due to a lack of knowledge and awareness. All policies have certain terms that if broken will render the agreement null, which means you won’t get anything. This is why you must carefully go through all the terms and conditions, to ensure that you won’t accidentally breach any clauses and destroy your chances of making a successful insurance claim if the need arises. 

Knowing your limits 

When it comes to insurance policies, you have to know your limits. If extreme sports and adventure are your thing, you will need to weigh up whether the high risk is worth that adrenaline rush. Your life or health insurance policies might not cover injuries or death in the case either happens because you decided to go mountain climbing.

Things change when you’re working on your own, and that includes the limitations of the risks you could take. It might warrant a lifestyle change.

Pension planning 

You’ll also have to figure out an insurance plan to help you with your retirement. When you’re self-employed, pension planning is entirely your responsibility.

Being knowledgeable about your insurance policies can save you a lot of complications in the future. You can start to take the necessary steps to ensure that you get compensated in the event anything goes wrong, and your future will be much more secure. 

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