Life insurance for the self-employed
Being self-employed may come with freedom, but future planning can be daunting. Prepare for the unexpected with life insurance.
Provided by L&G.
Can I get life insurance if I'm self-employed?
Yes, you can get life insurance if you’re self-employed. As you work for yourself, you may have less occupational benefits than people employed through a company – like company sick leave, Statutory Sick Pay and ‘Death-in-Service’ Benefit. Life insurance can offer a financial lifeline to your family in the event of your death, or if you’re diagnosed with a terminal illness.
Do I need life insurance If I'm self-employed?
While it’s not a legal requirement, having life insurance can be beneficial – especially if you’re self-employed and not receiving the luxury of occupational benefits. Lots of employers offer a life assurance policy or ‘death-in-service’ benefit, but this isn’t applicable if you’re self-employed.
Benefits of life insurance for self-employed people
Being self-employed has lots of advantages, but it can mean you have less protections and benefits that come from being an employee at an organisation. Being self-employed might also mean you have unpredictable finances, so you may be considering forms of self-employed income protection. Life insurance can provide reassurance that your loved ones are taken care of in the case of your death.
Is personal life insurance tax deductible if I’m self-employed?
No, unlike some other expenses, life insurance isn’t tax deductible if you’re self-employed. On the other hand, payouts from life insurance aren't subject to income tax.
How does life insurance for the self-employed work?
Life insurance policies for self-employed individuals are the same as regular life insurance policies. They aim to provide reassurance that your family are protected and that they’ll be financially supported should the worst occur.
Choose the right policy for you and your family
Everyone lives different lives – so your life insurance policy should be personal to you too. Depending on your situation and what you value most, you can choose cover that suits you and your family.
From decreasing life insurance, designed to protect a repayment mortgage, to over 50s cover, here’s how you can select the right protection for you:
Decide how much cover you need
First, you need to decide on the amount of cover you need. This is often based on income. If you’re stuck, consider big things that will need to be taken care of – like the mortgage. Simply put, it’s the amount your family might need to be able to pay on-going expenses after you’re gone.
Use the Sainsbury’s Bank Life Insurance Calculator for a better idea of the cover you require.
Agree on the policy length
Next, you need to decide on your policy length. This may depend on your age, mortgage repayments and how long you plan to be self-employed. Depending on your age, you could decide to get cover for up to 50 years, or for the rest of your life. Or you may decide a shorter term, in line with mortgage repayments or if your employment situation has potential to change.
Consider extra protection
Life can throw curveballs. So, you may also consider additional add ons to your life insurance if you’re self employed. For an extra cost you may decide to add critical illness cover in the event you become too ill to work. Or accidental death benefit in case you’re involved in a serious accident.
Life insurance for the self-employed: your options
Level life insurance
With level life insurance, the premium and the amount of cover remains the same throughout the policy. So, if you were to pass away, as long as the cover is still in place, your family will be able to access the same amount – regardless of when they claim.
Decreasing life insurance
With decreasing life insurance, the payout decreases over time. This policy is often chosen to help protect a repayment mortgage. The amount of cover reduces roughly in line with how your repayment mortgage decreases, but your monthly premiums stay the same. It’s often a more cost-effective alternative to Level Term life insurance.
Critical illness cover
Critical illness cover is a policy you could take out at the same time as life insurance, to offer a financial helping hand if you become critically ill. This could help with medical expenses, childcare costs, mortgage repayments and more, if you develop a critical illness or condition covered by the policy.
Need more information about life insurance?
Life insurance calculator
Work out how much cover you might need for your policy.
Life insurance for families
Find out why people choose to take out life insurance for their loved ones.
How life insurance works
Learn how life insurance works and how cover could help your family when the worst is to happen.
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