Is Income Protection Insurance worth it?

Self-employed tradespeople and small business owners risk losing significant income when they cannot work due to injury or illness. Income Protection Insurance will pay out a regular monthly sum while you’re out of action, allowing you to cover your essential expenses while you concentrate on recovery.

What is Income Protection Insurance and is it worth it?

Income Protection Insurance is a type of cover that pays a monthly sum to replace your income should injury or illness leave you unable to work for a period of time ranging from a few weeks to several months.

Working for yourself brings many benefits, but it’s not a path for the weak. Not least because if you work for yourself, nobody is going to cover your income if you are injured or become too ill to work. That’s why protecting yourself with the right insurance is one way to build that safety net if you call yourself ‘boss’.

Whether it’s ‘worth it’ is down to you. If you’ve got a significant stockpile of cash saved to cover your expenses for a few months, then maybe Income Protection Insurance is not top of your priority list. However, if you are (like many of us) depending on that payday every month, if you’d would rather not sink your savings into keeping yourself afloat, or you simply want an additional layer of protection - then this cover can be a real lifesaver.

We all like to think ‘that’ll never happen to me’. However, it’s good to plan for the unexpected no matter how positive your outlook. Self-employed tradespeople, such as sole traders, or those running trades businesses, are particularly vulnerable to loss of income due to the high risk their work carries. This is worth remembering when it comes to deciding to take out protective insurance policies like Income Protection Insurance.

What does it cover?

Income Protection Insurance covers your income in case you are signed off work for 30 days or more due to:

• Injuries that prevent you from working. This includes accidents that happen either while on the job or during your own time.

• Sudden illnesses or diagnoses that mean you cannot perform your usual duties at work.

Income Protection Insurance pays out a monthly sum up to your chosen level of cover (with Rhino that’s up to £2,500 each month) until you’re ready to pick up your tools again. The exact coverage you’ll receive will depend on the policy you select and its terms and conditions.

With Income Protection Insurance, the payout goes straight to your bank account each month. Whether you use it to cover a mortgage, rent, bills, loan repayments, groceries, childcare costs that’s up to you, and you have the flexibility to use it as you see fit.

With Rhino’s Income Protection Insurance, there is also an accidental death benefit should the very worst happen. This will provide your loved ones with up to 12 times your selected monthly benefit amount in a lump sum to help keep things steady for those left behind.

Here are some examples of scenarios where Income Protection Insurance could apply:

• A self-employed plasterer injures his wrist while playing 5-a-side football. Income Protection Insurance provides regular monthly income until he’s healed and able to pick up that trowel once again.

• A roofer has a bad fall from the scaffold and breaks his leg in a few places. Income Protection Insurance replaces his earnings for the months it takes to recover, during which time he can focus on his physical rehabilitation.

• A heating engineer running a small business undergoes surgery and is told to rest up for two months over Christmas. His business could not have survived this gap in income, but luckily, he has Income Protection Insurance and can relax as his income is replaced during this period.

• A carpenter develops chronic shoulder problems, meaning he must cancel his jobs for the next three months to recover with physio. He claims on his Income Protection Insurance and can meet all his essential costs during this time.

• A builder develops a serious illness which requires a long hospital stay. He can’t accept any jobs from his hospital bed, but his Income Protection Insurance ensures his bills are paid during the difficult period.

All payouts are subject to policy terms, conditions and exclusions.

What’s the difference between Income Protection Insurance and Personal Accident Insurance?

These two policies are often confused for each other – but they are not the same.

Income Protection Insurance is about replacing your lost income if you can’t work. This is a monthly payment designed to help people meet their financial obligations despite their income temporarily stopping following an injury or illness.

Personal Accident Insurance is there to pay out a one-off payment (up to £50,000 with Rhino) to cover a specified injury following an accident that leaves you unable to work for a period of time. Serious injuries can come with hidden costs, such as adaptations at home, physical rehabilitation, travel to and from medical appointments and even extra paid help at home. Personal Accident Insurance exists to smooth the path to recovery following an accident, but it won’t ‘replace your income’ in the way that Income Protection Insurance can.

Some tradespeople choose to be covered by both policies for that robust all-round protection.

How much is it?

The cost of your premiums will depend on the level of cover you choose (up to £2,500 per month). You should consider factors such as your monthly fixed costs, your dependents, whether you have any back-up savings and any debt repayments when choosing how much income protection you want.

To get an accurate quote, talk to Rhino today - our cover is some of the most affordable around.

Do I need Income Protection Insurance?

As a self-employed tradesperson, you might be used to soldiering on through plenty of aches and pains. But if a serious accident, injury or illness leaves you unable to work for a while, the financial impact can be significant.

Income Protection Insurance offers valuable protection for those without employer sick pay benefits. Even if you have a partner or spouse sharing the financial load, you should seriously consider whether you could get by on their income alone for an extended period.

If those ‘what ifs’ keep you awake at night, then it’s well worth investing in the peace of mind Income Protection Insurance brings.

How can Rhino help?

Rhino are expert trade industry insurance brokers, so we can help guide you to understand which level of protection might be right for you. We understand the reality of the challenges faced by self-employed tradespeople and can offer you straightforward advice on how to select the right policies and cover limits.

Talk to us from 8:30am – 5:30pm Monday – Friday on

, or if you’d rather play around with our quick quote engine.