Income protection and Self-Employment

If you are setting up a new business, probably the last thing on your mind is the subject of potential ill health and accidents.

Typically, you’ll be focusing on your business plan, funding, advertising and a whole host of other activities related to making your business a success.

Now if you are extremely lucky and are independently wealthy, you may not be initially relying on your business to generate income for you but perhaps for the majority of start-ups that is not the case. More commonly, you may have an initial period where you have relatively low expectations of income generation but your plan may very quickly presume that, as your business ramps up, it starts to generate income that you and your family can live on etc.

If you find yourself in the second category, then depressing as it may sound, it might be advisable to spend as little time thinking about how you would cope with being unable to work.

One of the first things that might happen in such circumstances is that any of your creditors might start to become fractious if you are unable to meet your repayment commitments.  However sympathetic they may be initially, it probably won’t last long and then on top of your illness or accident troubles, you may very quickly start to face financial problems as well.

It is also the case that you might also start to struggle to meet your own routine daily living expenses. Things such as food, clothes and utilities, are unfortunately not free and if you are unable to pay for them then you may just have to do without.

Given the relatively small amounts of (if any) government help that might be available to the self-employed in such circumstances, it might be advisable to start to think about some form of contingency provision in your business plan.

Fortunately, there are insurance policies available that might help.

Products such as income protection may be able to generate you a monthly income in circumstances where you find yourself unable to work due to sickness or accident.  The amount of income provided will, of course, vary depending on the type of policy you purchased and how much you are willing to pay for it.

That also applies to how long the payments would continue for and to some extent, what definitions of incapacity were required to give you peace of mind.

Almost inevitably, the thought of paying out for more insurance is not one that pleases most people.

Yet it might be advisable just to do a little scenario-playing in your own mind.

If misfortune did hit and you found yourself unable to work, just how would you cope?

If you don’t have an immediate and obvious answer to that, then it might be time to find out more about income protection insurance.

Guest post by Jason

2 Responses to Income protection and Self-Employment

  1. Over the years, I’ve received a lot of solicitations for things like this. While I haven’t signed up yet, I wouldn’t be opposed to if I found a great option.

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