Income protection for the self-employed (UK 2026)
If you work for yourself there is no employer sick pay and no Statutory Sick Pay to fall back on, so income protection often matters more — not less. We explain how cover is set against your taxable profits, how to choose a deferred period when nothing bridges the gap, and why keeping clean accounts makes a claim simpler.
The short version
- No safety net: the self-employed get no employer sick pay and cannot claim SSP, so a long illness can stop income entirely.
- Cover is based on profits: insurers usually set the benefit on your taxable profits (net profit), not turnover.
- Deferred period matters more: with nothing to bridge the wait, many sole traders choose a shorter deferred period.
- Keep your accounts: tax returns and trading accounts are the evidence used to set — and later prove — your income.
What changes when you’re self-employed
| Point | What it means for the self-employed |
|---|---|
| No employer sick pay | There is no salary continuation and no SSP for sole traders, so the policy is often your only replacement income |
| Cover based on taxable profits | The insurable benefit is usually a percentage of your net (taxable) profit, not your gross turnover |
| How the benefit is set | Typically around 50–65% of your earnings, paid as a tax-free monthly amount while you cannot work |
| Keep accounts as proof | Tax returns (SA302), trading accounts and bookkeeping are used to verify income at application and at claim |
| Choosing the deferred period | With no sick pay to wait out, a shorter deferred period starts payments sooner — but costs more |
Indicative orientation only — not a quote. Each insurer’s underwriting and definitions of income differ.
Why it’s built on your taxable profits
Employees insure a salary; the self-employed insure profit. Insurers generally base the monthly benefit on your net taxable profit — what is left after allowable business expenses — rather than turnover, because that is the income actually supporting your household. For a limited-company director, “income” may be defined as salary plus dividends drawn from the business, so it is worth checking how each insurer words it. The benefit is normally capped at a proportion of that figure, typically around 50–65%, and paid tax-free while you are unable to work.
This sits alongside, rather than replaces, a lump-sum policy. Life insurance pays out once on death; income protection can pay repeatedly across your working life if illness or injury keeps you off work. Many self-employed households hold both — see the income protection hub for how the two fit together.
The deferred period when there’s no sick pay
The deferred period is the gap between being unable to work and payments starting — commonly 4, 13, 26 or 52 weeks. An employee with months of company sick pay can take a long deferred period to lower the premium. A sole trader usually cannot: with nothing coming in, a long wait means draining savings or going without. That is why many self-employed people choose a shorter deferred period so the benefit starts sooner, accepting a higher premium for that earlier protection.
The sensible approach is to match the deferred period to how long your emergency savings would genuinely keep the household running. If that is a few weeks, a short deferred period makes sense; if you hold several months of reserves, a longer wait can cut the cost without leaving a gap.
Keep your accounts as proof of income
Because there is no payslip, insurers rely on your financial records to set and verify the benefit. Keep your self-assessment tax returns and SA302 calculations, trading accounts and up-to-date bookkeeping — these establish your insurable income at application and are the evidence requested if you ever claim. Newer businesses with a short trading history may be assessed on whatever full years are available, so accurate records from day one make cover easier to arrange. For the wider picture of how cover protects a self-employed household, the income protection hub and the life insurance section explain how each policy works together.
Self-employed income protection FAQs
Information only — not financial advice. My Insurance Expert is not an FCA-authorised intermediary and does not arrange or sell policies. Figures are indicative ranges for orientation, not quotes. Last updated: 2026-06-13