Income Protection Insurance is a policy which will pay you a monthly sum for up to a year if you’re unable to work and make your regular income due to illness or injury.
This type of insurance is extremely valuable to self-employed tradesmen and women who rely on their ability to be fit and work-ready at all times in order to make a living.
When you’re self-employed, it’s a trade-off. You may be free from a nagging boss and a stagnant salary, but you also give up certain securities that many salaried workers take for granted. One of these is Statutory Sick Pay (SSP), which is offered by all UK employers by law. Most employers top up SSP with their own company sick pay policy, which usually means if you’re working for a company, you’d get your full usual salary for a certain number of weeks (e.g., 12 weeks), before this would reduce to half pay for a further period.
Without this handy benefit, self-employed workers are left vulnerable financially if they should fall ill or have an accident which leaves them unable to show up to jobs.
Anyone who is self-employed runs the risk of needing to take unpaid sick leave. But if you work in the trades, this risk is significantly elevated. Trade work can be dangerous, with the majority of the UK’s workplace accidents occurring in trade-related roles.
According to the HSE, there were 561,000 injuries at work in the UK in 2022/23. Remember, the real figure will be much higher, as these are only the injuries that were self-reported. Further, around a quarter of the injuries kept the injured party off work for more than a week. The majority of these accidents will have been in trade work, with construction roles usually topping the list as the most hazardous type of work (with 30 fatalities in 2022 according to HSE).
Income Protection Insurance won’t just cover you at work, either. If you have an accident when you’re off the clock, a good Income Protection Insurance policy will still pay out to cover your missed income through time off work.
For self-employed tradespeople, it all boils down to a simple equation.
No work = no pay.
Unless you have plenty of savings that you could use in an emergency, this policy is very important if you’re self-employed in the trades. If your regular income comes to an abrupt halt, things like your mortgage payments, rent, utility bills, groceries and other essential costs of living will go unpaid. Some people turn to re-mortgaging their home or use credit cards at times like this – both of which can be stressful and poor choices for your long-term financial health.
Income Protection Insurance serves as a safety net. With this insurance, you will receive a regular sum to cover your income (up to your chosen level of indemnity and a maximum of £2,500 per month) if you suffer from an injury as a result of an accident, or become sick and are unable to work for a period of up to one year.
Even salaried employees can benefit from Income Protection Insurance. At Rhino, our speciality is protecting self-employed tradespeople, but this is one policy that has your back even if you work for someone else.
If your company isn’t generous with their staff sickness policy, you may only qualify for SSP, which as of 2023 is £109.40 per week for 28 weeks. Obviously, this isn’t enough to live on in this day and age, so you’d quickly see yourself getting into debt if this was your only option as an employee. For this reason, Income Protection Insurance is a good idea for salaried employees as well as self-employed tradespeople.
If the worst happens and you die as a result of an accident (whether you’re at work or not at the time), the insurance will pay a lump sum equal to 12 x your monthly benefit amount to your nominated person (usually your next of kin). For example, if your policy has a monthly indemnity limit of £2,500 and had your partner as your beneficiary, then upon your death your partner would receive a lump sum of £30,000 to help during this difficult time.
Here are some examples of scenarios where Income Protection Insurance would save the day for tradespeople:
Sam
Sam is a plasterer who relies on his hands to perform his job. While driving one weekend, Sam’s car was hit by another driver and Sam suffered a broken wrist. Sam was advised by his doctor to take 12 weeks off work and not so much as pick up a trowel to allow for his wrist to fully heal. Luckily, Sam had taken out Income Protection Insurance with Rhino. Sam was able to meet his share of the mortgage, bills and repayments and enjoy a leisurely recovery thanks to £2,000 per month from his insurer.
Grant
Grant is a builder who took a nasty fall while working on a scaffold. Grant suffered a dislocated shoulder, putting him out of the construction game for a month as per his doctor. Grant’s income made a claim on his Income Protection Insurance through Rhino, and at the end of the month he received £2,500 to keep everything running smoothly at home.
Hana
Hana is a Painter & Decorator. Hana is unfortunately diagnosed with an infection which requires hospital treatment. Hana has to cancel her scheduled painting and decorating jobs for the next few weeks as she cannot commit to them. She makes a claim on her Income Protection Insurance through Rhino, which pays out her agreed £1,500 monthly, which covers her half of the mortgage, bills and the other essential costs during her treatment. Less stress during this time means a quicker recovery for Hana.
Exclusions
There are some important exclusions to consider when taking out Income Protection Insurance. For example, if you’re under the influence of alcohol or drugs while you have an accident then you won’t be able to make a claim on your policy. There are certain health conditions which are exempt, too, including depression and anxiety.
Always read the Policy Wording document in full before taking out cover. And remember, you can cancel at any time during the 14 days after you purchase your policy.
Income Protection Insurance is an important policy for any self-employed tradesperson. The likelihood of you having an accident which requires you to take time off work is relatively high, while the impact of losing your income can be huge.
To safeguard your livelihood and ensure financial hardship doesn’t fall on you and your family, we recommend taking out Income Protection Insurance. Before choosing an indemnity limit, you should consider your existing financial commitments and essential costs of living. Obviously, the higher the limit of indemnity you choose, the higher your premiums will be.
Income Protection Insurance from Rhino Trade Insurance starts at just £66.24 a year – that’s just £5.52 per month. Give one of the Rhino team a call today to chat about your cover requirements – or try our quick quote engine to get a personalised quote in minutes.
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