If you are self-employed and could not work because of illness or injury, your income would usually stop more or less straight away, and there is no employer sick pay to catch you. That is exactly why income protection for the self-employed is worth understanding: it pays you a regular, tax-free income if you cannot work, and for many people who work for themselves it is the only real safety net there is.

This guide is a plain-English walk through how income protection works when you are self-employed, how insurers look at your earnings, and how to weigh up whether it is right for you. We are a broker, not a provider, so the aim is to help you decide clearly, not to sell you anything.

Can the self-employed get income protection?

Yes. Self-employed people can take out income protection in the same way as employees, and in practice it is often more relevant for them, not less. The cover pays a monthly amount if illness or injury stops you working, and self-employed income protection is a well-established part of the market, so being your own boss is not a barrier to arranging it.

Why income protection matters more when you are self-employed

When you work for yourself, the usual cushions simply are not there. There is no employer to keep paying you, and crucially there is no Statutory Sick Pay either, because SSP only applies to employees. If you cannot work, the income tends to dry up quickly, while the mortgage or rent, the bills and the everyday costs carry on regardless.

For a lot of self-employed people, that gap is the whole risk in a nutshell. A few weeks off might be manageable on savings. Several months, or longer, is where things can get serious fast, and income protection for self employed workers is built precisely for that scenario.

What is your actual safety net if you cannot work?

It is worth being honest about what the state provides, because it is less than many people assume. If you are self-employed and unable to work due to illness or disability, the main support is usually New Style Employment and Support Allowance (ESA), a GOV.UK benefit with its own eligibility rules. It is a modest amount and not designed to replace a working income.

So for most self-employed people the realistic safety net is: your savings, possibly some ESA, and then not a great deal else. Income protection exists to sit on top of that and replace a meaningful chunk of your earnings while you recover.

How income protection works for the self-employed

The mechanics are the same as any income protection policy, with a couple of points that matter more when you are self-employed:

How insurers assess self-employed income

This is the part that is genuinely different for the self-employed, so it helps to know what to expect. Because you do not have a payslip, an insurer works out your income from your accounts and tax records, typically looking at your net profit (what the business makes after expenses) rather than your turnover. Sole traders, partnerships and limited company directors can each be assessed slightly differently, and for company directors salary plus dividends may come into it.

The practical upshot: it pays to have your figures in order. Recent accounts, tax calculations and a clear picture of what you actually draw from the business make the whole process smoother and the cover more accurate.

Choosing the deferred period when you have no sick pay

The deferred period is the waiting time between stopping work and the policy starting to pay, and it is a bigger decision for the self-employed than for employees. An employee with months of company sick pay can afford a long deferred period. If you are self-employed with no sick pay at all, your savings are the only thing bridging that gap, so a shorter deferred period may matter more, even though it tends to cost a little more. Matching the wait to how long your savings could realistically last is the sensible approach.

What income protection covers (and what it does not)

Income protection covers a broad range of illnesses and injuries that stop you working, commonly including musculoskeletal problems, serious illnesses, and mental health conditions such as depression and anxiety. What it does not do is pay out simply because work has dried up or you have lost clients. It is cover for being unable to work due to illness or injury, not for a quiet patch in the business, which is an important distinction when you are self-employed and income naturally ebbs and flows.

How much cover, and what does it cost?

Cover is usually based on a percentage of your earnings rather than the full amount, and the cost depends on your age, health, occupation, the level of cover, the deferred period and how long payments would last. Physical trades typically cost more to insure than desk-based work, for instance. We are not going to quote a price, because the honest answer is that it varies a lot from person to person, which is exactly why comparing across the market tends to be worthwhile. You can read more on our income protection page, and it is also worth knowing how this differs from critical illness cover, which pays a one-off lump sum rather than a monthly income.

The bottom line

For the self-employed, income protection does a simple but important job: it replaces a regular income if illness or injury stops you working, in a situation where there is no employer and no sick pay to fall back on. The details worth getting right are the deferred period, the amount of cover, and having your earnings evidence ready so the policy reflects what you really make. Whether it is right for you depends on your savings and circumstances, and tailored advice, free and with no obligation, is the sensible way to work that out.

Frequently asked questions

Can self-employed people get income protection?

Yes. Income protection is available to the self-employed and is often more relevant for them, because there is no employer sick pay or Statutory Sick Pay to fall back on if illness or injury stops them working.

Do the self-employed get Statutory Sick Pay?

No. Statutory Sick Pay only applies to employees. If you are self-employed and cannot work, the main state support is usually New Style Employment and Support Allowance, which is modest, so many people rely on savings and income protection instead.

How do insurers work out income protection for the self-employed?

They base it on your accounts and tax records, usually looking at your net profit rather than turnover. Sole traders, partnerships and company directors can be assessed slightly differently, so having recent figures to hand helps.

Does income protection cover loss of work or clients?

No. It covers being unable to work due to illness or injury, not a downturn in the business, losing clients, or redundancy. It is income replacement for ill health, not for a lack of work.

What deferred period should a self-employed person choose?

It depends on how long your savings could cover your essentials. With no sick pay to bridge the gap, the self-employed often consider a shorter deferred period, accepting a slightly higher premium in return for the policy paying out sooner.

How much does self-employed income protection cost?

It depends on your age, health, occupation, the level of cover, the deferred period and how long payments last. Physical occupations usually cost more than desk-based ones. Comparing across the market is the best way to see what fits.

Sources

About the author

Tanweer Hussain

Here since 1999, Tanweer is a Protection expert having worked in our customer facing teams and best practice teams.

Top Quote Limited is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited, which is authorised and regulated by the Financial Conduct Authority. This article is for general information only and does not constitute financial advice or a personal recommendation. The suitability of any product depends on individual circumstances.