IPI for the Self Employed
IPI, or income protection insurance, can be purchased by self employed professionals or traditional employees. Self employed individuals, who do not have the benefit of receiving sick pay through an employer, may benefit from the financial security that income protection insurance provides. If you work for yourself and you become unable to work because of a serious illness, a severe injury or a disabling accident, IPI payouts may fill the gap between your state benefits and the income you usually earn.
Risk Management and Self Employment
Self employed individuals are largely responsible for providing their own insurance and securing their financial resources against the eventualities of life. Income protection insurance can be a lifesaver to a self employed professional if you cannot work for medical reasons. Because self employed individuals do not qualify for Statutory Sick Pay, or SSP, they are limited to benefits from Employment Support and Allowance, or ESA. Whilst these benefits are helpful, they rarely cover the expenses of an entire household.
Income protection insurance payouts can cover a significant percentage of your income, generally between 50 and 70 percent of your gross earnings, depending on how much you earn. With the benefits from your policy, you can cover mortgage repayments, groceries, utilities, transport and other household expenses. Your payouts will be made monthly or weekly for as long as your coverage lasts. If you reach retirement age or pass away before your cover lapses, your payouts will end at that point in time.
IPI can be a valuable component of a personal risk management plan for the self employed. Choose an affordable policy that offers the protection you need to cope with an unexpected loss of income. Although IPI will not cover financial losses if your work slows down due to a decline in the economy, you can expect to have financial support if you cannot work because of a physical disability or a severe illness. Most IPI policies exclude pre-existing conditions, pregnancy, self inflicted injuries and substance abuse.
Additional Financial Resources
To prepare for the possibility of a debilitating illness or injury, self employed professionals should have a number of financial resources at their disposal. Income protection insurance payouts should be combined with state benefits and funds from savings or investment accounts to provide a well rounded approach to emergency management. You may apply for ESA benefits if you have been unable to work for health related reasons for 4 days in a row. In order to qualify, you must be seeking medical treatment for your condition.
If you become unable to work because of an injury or illness, you may draw from the funds in your savings or investment accounts. For the self employed, it is especially important to store away funds for a rainy day. If you receive payment on a large contract, inherit a small sum or money or receive a bonus from a client, consider investing in a fixed rate account, or bond, which will increase in value until its maturity date. Consider opening an Individual Savings Account, or ISA, a tax free fund that may increase in value through interest or investments.
The benefits of IPI for the self employed are numerous. With income protection insurance, you can enjoy the financial security of a regular employee by receiving payouts that replace your earnings if you are suddenly incapable of working. Benefits from IPI are not subject to income tax, so you may apply the entire payout to your bills. With IPI, you can protect your financial interests and avoid the potentially devastating consequences of falling into arrears or defaulting on loans.
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What People Are Saying
This site let me compare a huge selection of quotes almost instantly, so I knew that I was getting the best deal on income protection insurance.
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