Moving from the relative security of a staff role to self-employment can be extremely daunting in so many ways, especially given today’s precarious economic climate.
Protection is essential when self employed. What if, in the course of your work, you detrimentally affect the fortunes of a business that has come to you for professional advice? Will you be able to meet the potential expense of a claim? What if you’re the household’s main breadwinner and you are taken ill? Are there precautions in place to help you meet your financial commitments?
One of your first considerations in the above scenario should be life cover. In the process of setting up your own business, it is likely that credit has been sought from external sources. Without life cover in place, if the worst were to happen, your loved ones would be saddled with the debt. Income replacement insurance is another important consideration. Such a policy would payout if you were unable to work due to illness or injury. However, it is important to note that income replacement policies usually have a three to six month exclusion period before which time no money is paid out. This is one reason why it is important, wherever possible, to have a buffer in a savings account to tide you over until the insurance policy kicks in.
Income replacement insurance
Income protection insurance can be a particularly expensive policy, but if you decide it’s the best bet for you, make sure you don’t skimp on the policy when it comes to ‘any occupation’ cover. Although cheaper, this policy will only pay out if you are unable to work in any occupation as a result of long term sickness, whilst ‘own occupation’ cover pays when you are unable to work in your current occupation.
In certain professions indemnity insurance is a legal requirement which must be met before you are able to commence work. In professions such as scaffolding, building, engineering, architecture or accountancy, there is a risk that a mistake you make, whether that is offering incorrect advice, losing vital documents or not completing a job to the expected standard will leave you open to a compensation claim. Professional indemnity insurance provides valuable cover against compensation claims and legal costs.
Of course the extent of the cover self employed people need depends on their individual circumstances. If you have a substantial pension and have already paid off your mortgage then you will not need the same amount of cover as an individual who has minimal savings behind them and considerable financial liabilities.
Either way, if you’re looking for professional indemnity insurance, you can find a highly competitive policy here at constructaquote.com. Simply enter your details and we’ll do the hard work for you, scouring the UK’s leading insurers on your behalf to find you the best value professional indemnity insurance cover.