By Chase de Vere Independent Financial Advisers, in partnership with IPSE

As a self-employed professional, your ability to earn an income is your most valuable asset. But what would happen if illness or injury stopped you from working – or worse? Unlike employees, you don’t have the safety net of sick pay, death-in-service benefits, or a corporate insurance package. That’s why financial protection is so important.

Why income protection matters

Income protection (IP) provides a regular, tax-free income if you’re unable to work due to illness or injury. It’s not about predicting the worst, but preparing for it. A well-structured IP policy can help you cover essential bills – from your mortgage to everyday living costs – while you recover.

Take Sam, a freelance designer and IPSE member. After a serious cycling accident, she was unable to work for 6 months. Thankfully, she had an income protection policy in place. This covered her outgoings and gave her the time and headspace to focus on her recovery, without financial stress.

Don't forget the protection you already have as an IPSE member

As part of your membership, IPSE provides Illness and Injury Cover to help compensate you if you’re unable to work due to an accident or illness. Depending on your level of membership, you could receive:

• Up to £1,500 of cover if you’re a Kickstart or Freelance member
• Up to £2,000 of cover if you’re a Director member

It’s a fantastic benefit that offers some immediate support if something unexpected happens. However, it’s unlikely to fully cover your needs over a longer period, so it’s still important to arrange additional personal protection.

You can find out more about IPSE’s Illness and Injury Cover here: Illness and Injury Cover

Other personal protection to consider

While income protection supports you if you’re unable to work, there are other forms of cover that protect your wider financial picture:

• Critical illness cover (CIC) pays a lump sum if you’re diagnosed with a specified serious illness, such as cancer, heart attack or stroke. This can be used to pay off debts, cover treatment costs, or simply give you breathing space.
• Life insurance provides a lump sum to your loved ones if you die – offering vital financial support at the most difficult time.

Using your business to pay for cover

If you operate through a limited company, there are often ways to pay for some types of protection in a more tax-efficient way. For example:

• Relevant life insurance is a tax-efficient way for your business to pay for your life cover. Premiums are typically classed as a business expense and aren’t treated as a benefit-in-kind.
• Some business owners can also use their company to fund executive income protection – a version of IP structured for directors – again, often more tax-efficient than paying personally.

This approach can save money, reduce your personal tax bill, and make sure you’re covered without dipping into your take-home income.

Don’t forget business protection

While protecting your personal income is crucial, it's also important to think about what would happen to your business if you – or another key person – could no longer work.
Here are a few business protection options to consider:

• Key person insurance provides a lump sum if a vital member of your business becomes seriously ill or dies, helping to cover loss of profits, recruitment costs, or loan repayments.
• Business loan protection helps repay outstanding business loans if a director or key shareholder dies or suffers a critical illness.
• Shareholder or partnership protection ensures remaining business owners can retain control of the company if a partner or shareholder passes away, by providing the funds to buy out their share.

Take the next step

Not sure where to start? You can get a sense of costs in minutes using our online protection quote tool. It’s quick, easy and totally commitment-free.

And if you’d like tailored advice, IPSE members can also book a free appointment with a Chase de Vere adviser. We’re proud to be IPSE’s independent financial advice partner – and specialists in helping self-employed professionals protect what matters most. Log in to access.