At a glance
Want the quick facts about self-employed income protection? Read on:
Self-employed income protection can cover some of your income if you can’t work due to illness or injury.
Short-term and long-term policies are available.
The cost can depend on factors including your job, age, existing medical conditions and the level of cover.
There’s usually a waiting period before payments start after a claim.
What is self-employed income protection?
Self-employed income protection insurance can help you recoup some of your lost earnings if you’re unable to work due to illness or injury.
With this type of cover, you can get regular payments of a proportion of your average income. This is typically 50-65%, though it varies between insurance providers.
You can choose between short-term and long-term income protection.
With a short-term policy, your cover will last for a set amount of time. If your claim is successful, you’ll receive payments until you can either return to work or the policy ends, whichever is sooner.
With long-term income protection, you’ll continue to receive pay-outs until you’re able to return to work or you reach retirement age.
Do I need self-employed income protection?
Income protection insurance isn’t mandatory if you’re self-employed. But it could be extremely useful.
To decide whether you need self-employed income protection, think about what would happen if you couldn’t work for an extended period because of illness or injury. Would you have enough savings or other resources to tide you and your family over until you could work again?
If the answer is no, self-employed income protection could be worth considering.
Why self-employed income protection matters
As of November 2025, there were around 4.37 million self-employed people in the UK, according to figures from the Office of National Statistics (ONS).
Income protection insurance can help self-employed people to focus on their recovery without the financial pressures of needing to rush back to work before they’re ready.
How does self-employed income protection work?
Self-employed income protection provides a regular monthly payment if you can’t work because of sickness or injury. This could include stress-related illnesses, mental health conditions or physical ailments.
Short-term policies, also known as accident and sickness insurance, typically last for up to 24 months. If your claim is successful, you’ll receive payments until you can either return to work or the policy ends, whichever is sooner.
With long-term income protection, you’ll continue to receive payouts until you’re able to return to work or you reach retirement age.
Payments aren’t made immediately after your claim is accepted. There’s a waiting or ‘deferred’ period before you get your first payout, which you can set when you take out cover.
Does sick pay for self-employed workers exist?
Unfortunately, there’s no statutory sick pay for the self-employed.
But as a self-employed worker, you may be able to claim the new-style Employment and Support Allowance (ESA) to help with living costs if you have health issues that prevent you from being able to work. Eligibility will depend on whether you’ve paid enough National Insurance contributions, usually within the past three years.
You might also be able to claim Universal Credit alongside the ESA. However, while these benefits can be a lifeline, they’re unlikely to be enough to replace your normal income.
For example, while your ESA claim is being assessed you’ll normally get the ‘assessment rate’ for 13 weeks while your claim is being assessed.
This will be:
Up to £72.90 a week if you’re aged under 25
Up to £92.05 a week if you’re aged 25 or over.
After you’re assessed, the most you could get would be:
Up to £92.05 a week if you look like you could get back to work in the future
Up to £140.55 a week if you’re not going to be able to get back to work.
What does self-employed income protection cover?
Income protection for self-employed people typically covers a range of conditions, including:
Musculoskeletal problems such as back pain or broken bones
Mental health conditions, including depression, stress and anxiety
Serious illnesses, such as cancer, heart disease and stroke.
Some policies also support you back into work with access to mental health counselling or physiotherapists for back problems, for example.
Payouts could be used to cover essential household bills, such as your mortgage payments, utilities and food shopping. They could also help you keep on top of credit card bills and childcare costs.
What won’t self-employed income protection cover?
Self-employed income protection won’t usually cover:
Your entire income – it will only cover a proportion of it
Business costs – it won’t cover your office expenses, for example
Lack of work – it only covers illness and injury, not losing a client or contract
Any illnesses or injuries caused by drug use, alcohol abuse or criminal activity
Not all providers will cover pre-existing medical conditions or specific illnesses, so make sure you’re clear on what the exclusions are before you take out a policy.
How much self-employed income protection cover do I need?
The amount of cover you need will be based on your income. But, as self-employed work patterns can be irregular, it can be difficult to measure your salary.
To work out your average income, most insurance providers will look at your pre-tax profits, usually over the course of the past financial year.
If you were to fall ill and make a claim, the monthly payout you receive would be an agreed percentage of that calculated average monthly income.
For example, if your average gross monthly income is £3,000 and you want to cover 60% of it, your monthly benefit would be £1,800.
How much does self-employed income protection insurance cost?
The amount you’ll pay for your insurance will depend on several factors, including the type of policy you choose and your personal circumstances. Insurance providers will consider:
Your job – the riskier your job, the higher your premium will be – a building contractor will likely pay more than a freelance graphic designer
Your age – the assumption being that the older you are, the more likely you are to fall ill or suffer an injury
Your health – existing medical conditions may make you more likely to claim
Level of cover – the higher you want your monthly income to be, the more you’ll pay
Policy length – you’ll pay less for short-term cover
The deferred period – generally, the longer you can wait for payments to start, the less you’ll pay in premiums.
What else should I consider when comparing income protection insurance for self-employed people?
When searching for self-employed income protection cover, consider these key points:
Definition of incapacity – your insurance provider will want to assess your ability to work if you make a claim. It'll base the decision on its definition of being ‘fit to work’, which is detailed in your policy. Some policies won’t pay out if you’re able to return to work in a different role than the one stated on your claim.
Definition of self-employment – providers may have specific criteria for what qualifies as self-employment. And some might differentiate between sole traders and directors of limited companies.
No guaranteed payout – you should also consider that there’s no cash-in value for self-employed income protection insurance. If you don’t use it, you won’t get any payout.
What other insurance policies should self-employed people consider?
As well as income protection insurance (or instead of it), you might also like to consider the following if you’re self-employed:
Life insurance for self-employed people could be worthwhile, particularly if you have dependants. It pays out if you die while your policy is active. There are policies tailored specifically for self-employment.
Mortgage protection insurance can be an alternative to self-employed income protection if you’re a homeowner. Whether it’s a good option will depend on how much you earn and what outgoings you’d need to cover if you were unable to work.
Health insurance gives you access to private healthcare. With speedier diagnosis and treatment, you may be able to return to work faster than waiting for NHS services.
Public liability insurance covers you if you’re taken to court by a member of the public who has been injured or had their property damaged as a result of your business activities.
FAQs
What is a deferred period?
A deferred period is how long you’ll have to wait to get your first payment after making a successful claim if you’re injured or ill. This could be anything from four weeks up to a year.
When deciding about self-employment income protection policies, you should think carefully about how long you can afford to wait before receiving a payment.
Will a self-employed income protection plan cover my full income?
No. Income protection covers a percentage of your monthly income – typically around 50%-65%. This means you may need to rely on savings as well, if you have them, or cut back on spending until you’re back working.
Will income protection insurance cover lost income due to short-term sickness?
Generally speaking, you’re unlikely to be able to claim if you’re sick for less than a month. Most insurance providers will set a minimum length of time that you’ll have to be out of work due to sickness or injury before you can claim.
Every policy is different, however, so check with your insurance provider.
Is self-employed income protection taxable?
Not usually. Payments received from policies to cover sickness, disability or unemployment will generally be tax-free.
Does self-employed income protection include critical illness cover?
No. Critical illness cover is a separate type of insurance. It’s intended to cover you if you get a serious illness, like cancer, and are unable to work as a result. It usually pays out a lump sum.
Critical illness only pays out for specific illnesses named in the policy. It’s often combined with or added to a life insurance policy.
Can I get income protection if my income fluctuates?
Yes, you can still get income protection if your income varies, such as when you’re self-employed or work on commission. Insurers usually base your cover on your average earnings over a set period of time (usually the past 12 months).
It’s important to give accurate income details and choose a benefit amount that you realistically back up with evidence, such as tax returns or payslips. This helps to ensure your payout reflects your true earnings if you ever need to claim.
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With more than eight years’ experience in writing and sub-editing content, Karen started her career in fashion before making the move to insurance. She now specialises in producing clear, engaging content that helps people make better financial decisions.
Karen’s areas of expertise include insurance products, such as car insurance, travel insurance and life insurance, as well as utilities such as energy comparison.
Stephen Maunder is an experienced personal finance editor, having spent more than a decade working for consumer print and online titles. He won several industry awards for his personal finance features at Which?, before becoming Deputy Editor at Compare the Market.
Tim Knighton is an expert in building and managing relationships with big brands for the benefit of customers, with more than 20 years of experience. He seeks out the right products that look after you and those you love most during the toughest times.
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