Let me start by saying that there is no such thing as “self-employed life insurance.” It is just a regular life insurance policy taken out by a self-employed person or a small business owner. I have no idea why this term has become popular, but if I had to guess, I would say it probably came from someone working in the marketing department.

self-employed life insurance

Do you need Life Insurance if you are Self-Employed?

Around 50% of self-employed people in the UK (information for the year 2019) had some kind of life insurance policy, but there is no universally correct answer to this question. Instead of offering you an exact answer, I will ask you some questions:

  • Do you have a family
  • Are you the breadwinner?
  • Can your dependents survive without your income?
  • Do you have a mortgage?
  • Do you employ another person to keep the business running?
  • Do you also have any loan obligations or land associated with your business?
when to take life insurance for self-employed

A life insurance policy for self-employed people can provide a safety net for those you love in the event of you passing on. Unlike a regular employment contract, where your family could expect some sort of payout from your employer in the case of your passing, in being self-employed, you rely upon your own ability to make venture assets to provide for your family.

By becoming self-employed, you could pass up lots of business advantages, like maternity leave and sick pay. As an independently employed worker, these are benefits you should ensure for yourself, and making sure you obtain them may very well be happening at the same time as attempting to provide for your loved ones.

Not everyone can get it! 

You probably think it has something to do with your employment status; for starters, you need to be self-employed, right? Wrong! I already told you that self-employment life insurance is actually a regular life insurance contract. 

So why can’t everybody get it? Well, not everyone qualifies for life insurance. This depends on many factors, such as your age, health status, lifestyle and more. One of the reasons why an insurer can deny your request is the nature of your work. The most common high-risk jobs are:

  • Electrician
  • Roofer
  • Professional driver
  • Pilot
  • Logger
  • Firefighter
  • Police
  • ...
not everyone can get life insurance
As a self-employed worker and/or the director of a limited company, you’ll be able to claim some forms of life insurance as a business expense.

Life insurance policies that can be claimed as a business expense are typically business life insurance policies, such as a relevant life insurance policy or a keyman insurance policy.

These are policies that can be taken out and paid for by a business and, therefore, can be classed as allowable business expenses.

A personal life insurance policy can’t be claimed as a business expense and will need to be paid for using your own funds.

Is life insurance for self-employed tax deductible?

Well, yes and no.

Life insurance as such is considered a personal expense and, therefore, cannot be deducted from taxes as a business expense. But there is a way around it. In this case, the company pays the premium for the policy and acts as a beneficiary in the event of the person's death. This keeps the company alive even when key people are no longer alive.

What type of protection is best for selfemployed workers?

That depends on a lot of factors. There are three main questions you need to ask yourself before making your decision:

What is it that you want to protect?:

  • Funeral costs
  • Salary
  • Childcare expenses
  • Rental costs
  • Mortgage

How long do you need protection for?:

  • Until you retire
  • Until you pay all your debts
  • Until your children become independent
  • Until you pass away

Individual circumstances:

  • Mortgage balance
  • Numbers of children
  • Their age
  • Amount of personal savings
imprtant question you need to aske before getting life insurance
You can read more about different types of life insurance on the Genius James Life Insurance page. I also want to suggest that you take a look at the critical illness insurance and income protection insurance, as they may be just what you need as well! 

Extra tip from Genius James

Self-employed individuals ought to ponder liability protection as it's a legitimate necessity in certain professions. Assuming somebody chooses to indict you, liability protection will pay your lawful charges.

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