• Matt Towe

Self-employed? Here are three types of personal insurance you can expense

More people are starting their own businesses in the wake of the pandemic. Whilst there are many benefits to self-employed life, going it alone means the buck stops with you, therefore personal cover is vital.

With the advantages of being your own boss, having the flexibility to choose where and when you work, and earning money doing something you love, the post-pandemic era has welcomed a new influx of entrepreneurs. As of February 2022, around 4.23 million people in the UK classed themselves as self-employed.

However, going solo is not without its risks. In the absence of protection and support from an employer, self-employed individuals face more considerable financial risks, such as losing an income if they cannot work due to illness or injury.

In a recent Instagram poll, 40% of our self-employed followers said they couldn't cover themselves financially if they became ill or injured. Half also admitted to not having any form of personal insurance to protect themselves, with perceived high costs, lack of financial priority, and general confusion being just some of the reasons they don't bother.

But there are insurances to help ease the burden should sickness or injury ever mean you couldn't earn an income - and if you look in the right places, they don't have to cost the earth. These insurances can also be paid as a business expense to be more cost-effective, something that a staggering 89% of our followers did not know.

Here we look at the three types of personal cover for self-employed individuals, what they are and why they are essential...

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Life insurance (also known as a relevant life plan)

  • It's like a regular life insurance policy, but the business pays the premium rather than the individual and the cover amount will not decrease over time.

  • It pays a lump sum to your family should you die - like a death in service benefit.

  • It's a tax-efficient way to give your family a lump sum should the worst happen and can also be used as an employee benefit to attract and retain talent.

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Critical Illness

  • It pays out a tax-free lump sum if you're diagnosed with one of the critical illnesses covered by your policy.

  • You can use the payout as you choose - to replace lost earnings, help the family pay their regular bills or pay the salary of a replacement who can keep your business running whilst you are out of action.

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Income Protection

  • It replaces your earnings if you are unable to work through illness or injury.

  • You can choose levels to pay yourself from 1, 2 and 5 years or a full-term benefit that will pay-out until your expected retirement age.

  • It's particularly important for self-employed individuals as they are without any employer sick pay benefit and this type of insurance carry the highest likelihood of a claim.

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How to know which personal cover is right for you?

Ultimately your needs as a self-employed person will differ from others. The business world is complex, and there are so many products out there, that it makes it difficult to know which is right for you.

As a broker, we can assess your needs and analyse the market to give you a well-rounded level of cover. We can also manage your expectations when it comes to a reasonable budget.

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How much does personal cover cost?

Like all business insurance, the cost of cover will vary between individuals and is very much based on the level of risk involved in claiming - factors such as age, occupation, health, lifestyle and smoking status all have a part to play.

There is also a common misconception that premiums for personal insurance are expensive, which is not necessarily the case if you go looking in the right place - this is where a broker can act as a matchmaker to pair you with a provider that suits your needs.


Self Employed with personal cover but not putting it through your business? Dig out your policy documents and speak to a broker. They can review your plan to ensure it stacks up against your current circumstances and look to put any new cover through your business - making the policy as cost-effective as possible.

Self Employed with no personal cover? Speak to a broker to research your options and tell you how much it will actually cost your business. It's FREE to do as they work off a commission and don't charge a fee.


To keep up-to-date on The Modern Broker follow @gameplanmatt on Instagram.

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