Being self-employed, you probably understand hard work better than most people. However, that doesn’t mean that the during your climb to the top you won’t start to question the value of your efforts or lose some inspiration along the way. Keeping up the faith when we are in the middle of trying times isn’t easy. Zig Ziglar said it best when he said, “People often say that motivation doesn’t last. Well, neither does bathing – that’s why we recommend it daily.”
If like me, you are self-employed you must get lots of advice pieces like this in your inbox most of which cover more exciting elements than Income Protection insurance. Having said that I question whether many of them are as critical. Here are some important Q&As to help you understand it further:
What is Income Protection insurance?
Income protection insurance, or IP insurance as it’s also known, can provide cover if you’re not able to work. There are typically three types of things that you’re protected against – accident and sickness only, unemployment only and the more comprehensive, accident, sickness and unemployment cover.
You’re able to protect up to 70% of your gross salary and it’s designed to replace your income and to pay out a tax-free monthly sum, which can be used to help ease any financial hardship whilst you’re unable to work.
Who should consider it?
Typical times when people consider it include:
- If they’d struggle to make ends meet if they had no incoming salary
- If they have dependents
- If they’re self-employed
Why is income protection so important to you if you are self-employed?
Cast your mind back to the days you were employed and you will remember that back then you got paid for holidays as well as sick days based on your employment contract. Being self-employed you have no such luxury particularly if you work on your own. Even if you employ a team the business will still carry on earning on your absence but a long absence can certainly threaten the business’s future. You probably think that uncertainty is a big part of being self-employed anyway but that is even a better reason to take up a policy protecting your income if you are unable to work.
How long should you keep up the payments?
Rather than looking at retirement, many people choose a set period of time which is often linked to the expected repayment date of a mortgage or another finance agreement. You’re not typically tied to the policy for that period of time, but so long as you continue to meet your premium payments the protection will remain in force.
I hope this has provided clarity regarding this insurance and what it is for. As always, happy to speak further if you want to discuss your options.
“Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against loss of income”