Life insurance for self employed
Different Life Insurance policies for Self Employed
A Life Insurance policy may be even more important for someone who has recently become self employed, as this type of insurance can provide the loved ones of the policy-holder with a financial pay-out. Additionally, someone who has recently become self-employed is unlikely to be able to rely on the pay-out from Death in Service cover; which is typically provided by an employer.
A Life Insurance policy with Beagle Street can cost you less than you think, as it’s a completely online application and you could get covered in as little as 10 minutes. Your occupation won’t affect your premium unless it is high risk such as dealing with explosives – we won’t ask about what you do day-to-day.
Term Life Insurance – how it works
A Term Life Insurance policy pays-out in the unfortunate event the policy-holder passes away within the term of the policy. After a set amount of time the policy will expire, and the policyholder will no longer be covered.
At Beagle Street we offer two types of Term Life Insurance, for more types of personal insurance when you are self employed, see below.
Types of Personal Insurance for the Self Employed
There are three main types of Personal Insurance that someone may look into if they are self-employed: Life Insurance, Critical Illness cover and Income Protection Insurance. All offer varying levels of financial protection and will provide a pay-out under differing circumstances; which is why you could consider all three when starting out as self employed.
Both Life Insurance and Critical Illness cover can be bought directly through Beagle Street. Our Life Insurance is a great option whether you’ve just started out Freelance, as a Sole Trader, or just become a Small Business owner.
Illness cover for Self Employed
If you have an accident, fall seriously ill, or even are diagnosed with a terminal illness you may have to take time off work for an extended period. There are a few options available for you to cover this eventuality; the main two are Income Protection and Critical Illness.
See below for further detail on the difference between Income Protection and Critical Illness cover.
Income protection vs Critical Illness
If you are seriously ill and can no longer work, Income Protection will pay out a regular income and cover you for a fixed period; usually up until the age of retirement. Critical Illness cover will pay out one lump sum if you are diagnosed with a condition covered in your policy.
A Critical Illness policy bought directly through Beagle Street can only be purchased alongside a Life Insurance policy, and so the term length of your Critical Illness cover will be the same as that of your Life Insurance policy. The benefit of our Critical Illness cover is that a claim will not affect your Life Insurance policy as it is a separate benefit.
Pay-Out
The regular pay-outs from an Income Protection policy will typically cover up to 70% of your gross earnings and can be used to financially protect you from loss of income if you have an accident or are too ill to work.
The one-time lump sum from your Beagle Street Critical Illness cover will pay-out an amount decided by you which can be from £5,000 to 100% of your Life Insurance sum insured. The amount you are covered for is completely flexible, and you can choose any amount between our maximum and minimum cover amounts.
This pay-out can be used for anything you like, but may be used to cover the additional cost of: medical appointments/ equipment, a carer, or to help cover your salary if you are off work for an extended period of time.
Claims
Unlike Critical Illness cover, Income Protection will not pay-out immediately after a claim has been accepted by your insurance provider. The payment to you will be deferred from 1 to 12 months after you make the claim.
You cannot usually claim on your Income Protection policy if you are made redundant, instead you will need to consider Unemployment Protection Insurance.
If you are diagnosed with one of our critical illnesses you can make a claim on your Critical Illness policy without affecting your Life Insurance policy. Our claims guide has further details.
Monthly payments (Premiums)
With an Income Protection policy if you change occupation it is likely that you will have to contact your insurance provider to let them know, and this may mean that you see change in your premium. The monthly payments of a Life Insurance and Critical Illness policy with Beagle Street are fixed for the term of the policy, so even if your circumstances change there’s no need to tell us as this won’t affect your premium in any way.
It’s worthwhile considering both types of cover, and you can find out how much a Life Insurance policy with Critical Illness cover will cost you by getting a Quick Quote, this should take less than 60 seconds.
Does Life Insurance cover accidental death?
Typically Life Insurance will pay-out in any eventuality in which the policy holder dies; whether this is through natural causes or otherwise. Some insurance providers may offer Accidental Death cover as an optional extra alongside your Life Insurance policy.
With Beagle Street we will provide you with Accidental Death Benefit (ADB) in the event that you do not receive an immediate decision on your Life Insurance application. ADB is a short term cover which will pay-out the amount of Life Insurance cover you have applied for or up to a maximum of £100,000. Find out more about our Accidental Death Benefit.
Are Critical Illness insurance premiums tax deductible?
As Critical Illness cover is a type of Personal Insurance then you cannot claim any of the premium you pay each month back in tax, unless you can show this is used for business purposes; such as protecting your employees.
If used for personal purposes then the pay out from a Critical Illness policy will go directly to you, and is paid completely free of tax.
If you were to set up your Life Insurance policy with Critical Illness cover in Trust, the benefits of the Critical Illness would be set-up outside of the Trust, and so would be paid directly to you.
Is Life Insurance tax deductible for self-employed?
Personal Insurances, such as Life Insurance, are not tax deductible. However, the premiums of a Group Life Insurance policy, such as a Relevant Life Plan, are tax exempt if the beneficiary of the policy will be for business purposes.
A Relevant Life Plan is an easy way of providing Group Life Insurance to your employees, and as defined in subsection 393B(4) is defined under section 480 of the Income Tax Act 2005.
Tax Laws
The information provided is based on our understanding of tax law and practice at the date of publication. These laws and practices may change in the future, and can be affected by the individual circumstances of the policyholder.
