When you’re self-employed, your income depends entirely on your ability to work. If illness or injury stops you, the financial impact can be immediate. That’s why income protection insurance is such an important safety net — it replaces part of your income if you can’t work due to health problems or accidents.
This guide explains how income protection works for self-employed people in the UK, what insurers look for, and how to choose a policy that genuinely supports you when you need it most.
What Is Income Protection Insurance?
Income protection is a type of insurance designed to pay you a regular income if you’re unable to work because of illness or injury. It usually covers up to 50–70% of your average earnings and continues until you’re well enough to return to work or until the policy term ends.
For the self-employed, it can provide stability when there’s no employer sick pay or safety net to rely on.
For a simple explanation of how income protection works, you can also read MoneyHelper’s guide to insurance and income protection.
Why It’s Especially Important for the Self-Employed
Employees may receive statutory or occupational sick pay, but the self-employed don’t. That means if you can’t work, your income can stop overnight.
Income protection bridges that gap, helping you cover essential costs such as:
– Mortgage or rent
– Bills and utilities
– Business expenses or childcare costs
– Everyday living costs for you and your family
It’s designed to keep your finances afloat while you recover.
How Insurers Assess Applications
When you apply for income protection as a self-employed person, insurers typically ask for:
– Proof of income: such as recent tax returns, accounts, or SA302 forms from HMRC.
– Occupation details: to understand the physical or mental risks involved in your work.
– Health history: including any pre-existing conditions, lifestyle factors, and smoking status.
Your premium will depend on your occupation class (how risky your work is), the amount of cover you need and how quickly you’d want the payments to start after you’re unable to work.
Choosing the Right Waiting Period
The waiting period (also called the deferment period) is the time between when you stop working and when the insurer starts paying out.
Typical waiting periods are 4, 8, 13, or 26 weeks.
– A shorter period means you’ll receive money sooner — but premiums will be higher.
– A longer period keeps costs down if you have savings or short-term reserves to fall back on.
Choosing the right waiting period can make a big difference to affordability and practicality. For a more detailed breakdown of how deferment periods affect premiums and payouts, see our guide to choosing the right waiting period for income protection.
Types of Income Protection Policies
Short-Term Income Protection
Pays benefits for a limited period (e.g. 1–2 years per claim). Usually cheaper and suitable if you’re building savings or expect to recover relatively quickly.
Long-Term Income Protection
Continues paying until you can return to work or the policy term ends — often until retirement age. It provides stronger, longer-term security.
Some policies also offer ‘own occupation’ cover, meaning you’ll receive payments if you can’t do your specific job, rather than any job. This is the most comprehensive level of protection.
If you’re not sure whether income protection or critical illness cover is the better fit, see our guide on critical illness cover vs income protection.
The Benefits of Income Protection
• Peace of mind — knowing you’ll still receive an income if you can’t work.
• Flexibility — you can tailor cover to your earnings and expenses.
• Continuity — helps you keep up with bills, mortgage payments, or rent.
• Support for recovery — many insurers offer rehabilitation or return-to-work services.
Things to Watch Out For
• Waiting period alignment — make sure the start date of benefits matches your savings buffer.
• Exclusions — some policies exclude pre-existing conditions or certain occupations.
• Proof of income — insurers will want accurate records, so keep your accounts up to date.
• Reviewable premiums — may rise over time; guaranteed premiums offer stability.
To compare policy features and insurer options, see MoneyfactsCompare’s guide to income protection: https://www.moneyfactscompare.co.uk/insurance/income-protection/.
It’s a good idea to regularly review your cover — our guide to reviewing and updating insurance policies explains why keeping your policy up to date matters.
Why Self-Employed Clients Choose Argyll Drummond
At Argyll Drummond, we help self-employed clients understand their protection options and secure the right level of cover at the right price.
Our advisers compare policies from across the market, explain the differences clearly, and make sure your cover matches your circumstances and budget.
You can explore more about our full range of insurance and protection services.