Getting employee benefits as a self employed person

Being in an employed position normally comes with a benefits package including sick pay and death in service. This gives you a cushion of money behind you should you be off sick or pass away during your time of employment. Of course, every company has their own set of rules for these kinds of benefits, but as a rule of thumb it is normally 2 times salary for death in service and full pay for up to 6 months. 

 

But if you are self employed, you do not have a benefit package in place. So what do you do to replace your salary if you are off work long term sick or if you pass away? How would you or your family be able to maintain your lifestyle and pay bills without your income? 

 

There is a solution in the form of life cover and income protection! 

 

Life cover will pay out a lump sum of money in the event of your death. This money could be used to pay off your mortgage or support your family who will no longer have your income coming into the household. We always advise to place this money in Trust meaning it is ringfenced to not get held up in the Probate process and will be paid out in 30 – 60 days from claim. It also means the money is ringfenced to not be included in the estate for any possible inheritance tax liabilities, currently at 40%. 

 

As for replacing your income, an income protection policy would be a great way to protect your lifestyle and bills in the event of you not being able to work long term. This would pay a monthly amount to cover your bills. You do not have to have a mortgage to have income protection as this can also be used to pay rent each month. Income can be set to pay you either for a limited period of time, for example 12 months, or up to retirement age! 

 

Both types of policy give you peace of mind if the worst was to happen, your family will be able to manage with the loss of income. With no policies in place, as a self employed person you could be relying on your savings. When you think about how long it takes to build a reserve of savings, these could be depleted within a couple of months just to cover bills. 

 

Speak to us today to talk about how we can create your benefits package! 

 

victoria@hdconsultants.net