What insurance is available when you are self-employed?
If you are no longer an employee on a salary you need to think about what will happen when if you should become unable to work due to illness of injury. Self-employed workers do not receive sick pay, but they may still qualify for some state benefits. There are a range of personal insurance and health coverage policies available to you if you are looking to make plans for your long-term health or medical expenses. Here are some options:
Income protection.
A long-term insurance policy, protection for your income from a policy like this usually lasts for many years and is put in place to support you if you are no longer able to work due to sickness or injury. The aim of such insurance is to replace part or all of your previous income (after tax). If you lose your job through illness or injury it would pay you on a monthly basis up to your normal retirement age.
Life insurance.
Life insurance plans pay out a lump sum, or regular payments, to your dependants if you die. This kind of cover is worth considering if you have children or others who depend on you financially. State benefit is limited, so if you can afford it, plan ahead.
Critical illness cover.
This kind of health insurance plan is a long-term medical plan which typically will pay you a tax-free lump sum if you are diagnosed by any of the serious illnesses, usually including stroke, heart attack and some cancers, which are covered by your policy. This kind of health insurance policy can be put in place to pay off a mortgage, other debts or to cover special adaptations you might need to make to your home if you need to use a wheelchair. Common illnesses that might prevent you from working, like back trouble or stress are not covered by this type of insurance.
Private medical insurance.
In the UK we have the National Health Service (NHS) but private medical insurance can be taken out to supplement the healthcare that is available to you. Some self-employed people take out additional health care cover to guard against loss of pay caused by waiting for NHS treatment. An employer might have offered you this kind of health plan, but once you become self-employed you cease to be eligible. If the premium is affordable, consider this kind of health insurance to increase your choices in the level of care available to you and when it is provided. If waiting for medical treatment is likely to mean loss of earnings, additional health insurance is a definite benefit to the self-employed. Separate dental cover is also available and may reduce waiting times for an appointment.
How do you get a good deal on self-employed health insurance?
If you were previously working as an employee for a company that offered a health insurance package, you might still qualify to stay with your insurer. Check with your provider to find out if remaining with them is affordable. If you didn’t have health insurance before you became self-employed you can shop around. Compare and contrast insurance before you buy or use a comparison website. When you are self-employed your health is at a premium because you do not have sick pay to fall back on.
Can you deduct private health insurance from income tax?
As a rule, only business expenses can be deducted when you are compiling your tax return. Your health premium has a personal benefit and so does not necessarily qualify. However, if you receive medical treatment that you have to pay for and you can prove that you underwent it for purely work-related reasons, then the insurance might be deductible. Seek the advice of an accountant as you can be fined for claiming benefits like healthcare that do not qualify.
What are the advantages of private health insurance?
For business owners, freelancers and other people in self-employment, one of the main benefits of health insurance is the being able to choose when you receive treatment so it doesn’t conflict with your business commitments. You may also gain some additional benefits from paying health insurance premiums:
- Early diagnosis of some illnesses
- Access to treatment.
- Choice of admission time or place.
- Additional assistance and information.