Plugging the protection gap
Posted by AndrewEarles on Monday 19th of March 2018.
If you're one of the increasing number of people who've become self-employed in recent years, you may have found the switch has left you without the employee benefits you previously took for granted.
Making the change from employed to self-employed is a big step and it's one more people are taking.
The number of self-employed people in the UK now stands at 4.80 million, representing 15% of the working population.
But while some may find they can earn more as a result, they might overlook the importance of replacing lost employee benefits like income protection and life insurance.
Death in Service
Many employed people automatically benefit from life insurance arranged on their behalf by their employer. This would pay a multiple of their annual salary were they to die while still employed, which could then be used to pay off a mortgage or maintain their family's lifestyle.
Some employees receive a proportion of their salary for a period of time if they become unable to work due to illness or injury (over and above statutory sick pay levels) and may benefit from access to private medical treatment.
Clearly, moving from employment to self-employment would mean these benefits cease, and potentially leave a protection 'gap'.
Mind the gap
Fortunately, the benefits you may have received automatically as an employee are also available to you as a self-employed individual - and they may be more affordable than you think.
Income protection insurance will pay you a monthly income if you become unable to work through illness or injury. Self-employed workers should consider this an essential piece of protection because it can help prevent your family suffering financial hardship and allow you space to recover more quickly without the burden of financial worry. Many insurance companies also provide support for customers to help them return to fitness as quickly as possible.
Life and critical illness plans can be individual plans or combined. Life insurance will pay out a lump sum or a regular income to your dependants if you were to die during the term of the cover. Critical illness plans pay out a lump sum if you are diagnosed with a specific illness. Both can help secure your family's financial future.
Private medical insurance (PMI) may be considered less of a priority than either income protection or life insurance, given the treatment you are entitled to via the NHS. For those seeking to replicate all the benefits they may have enjoyed when employed, there are a range of policies available at varying price levels. If you are interested in PMI we can introduce you to our PMI referral partner.
Are you covered?
If you're self-employed it's easy to make sure your employment status doesn't put your long-term financial security - and that of your family - at risk. Get in touch to discuss your protection options.