Can I get life insurance as a self-employed person and how do I compare quotes?

Yes, it’s possible to get life insurance if you’re self-employed. 

In fact, it can be particularly beneficial for self-employed workers to have life insurance to help protect loved ones should the worst happen. 

A pay out could help to replace your income after your passing, meaning your family wouldn’t need to make cutbacks to their day-to-day living during a difficult time. 

Self-employment comes in many forms; from owning a limited company or being a sole trader to contracting and freelancing, so it’s important to find the right policy to meet your circumstances. 

Comparing quotes can help you to find your ideal policy but, when juggling your workload, it could be hard to find the time. 

Using a comparison service to get multiple life insurance quotes can help to save you time (and money). Why not get quotes from leading UK insurers through The Insurance Expert?

The Insurance Expert is owned by the UK’s largest life insurance broker*, Reassured. Please note that Reassured will conduct the life insurance comparison service. 

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Self-employed life insurance [key points]

  • There isn’t a specific life insurance policy for self-employed workers and freelancers. ‘Self-employed life insurance’ or ‘life insurance for self-employed’ simply refers to a life insurance policy taken out by someone who’s self-employed
  • It’s possible to get life insurance if you’re self-employed. Being self-employed doesn’t automatically affect your eligibility but the specifics of your role could (for example, if your job is considered as ‘high-risk’ 
  • If you’re self-employed, life insurance can help to act as ‘death in service’ protection, which you wouldn’t receive as it’s paid by an employer. It pays out upon your death (during a set term), helping to replace your income and cover key expenses for your family 
  • You could also consider additional protection to help cover your income in case of serious illness or injury (such as critical illness cover or income protection)
  • As self-employment comes in many different forms, it’s crucial to compare as many policies and insurers are possible to make sure you’re getting cover that’s right for your personal circumstances 

What is life insurance?

Life insurance is a financial protection policy that pays out a lump sum to your loved ones if you pass away during the policy term. 

Your loved ones can use the pay out to help cover large expenses such as the mortgage, or other debts, as well as day-to-day living costs. 

There isn’t a specific ‘self-employed life insurance’ policy, but there are many options on the market that could be suitable for your circumstances.  

Policies often come with flexible terms and conditions that allow you to tailor the policy to meet your needs, such as choosing how much will be paid out to your loved ones (sum assured) and how long you’ll be covered for (policy term). 

If you’re worried about how your loved ones would cope without your income should the worst happen, life insurance can help to give you peace of mind. 

Why is life insurance important for the self-employed?

Life insurance is an important consideration for most, but it’s particularly important for the self-employed. 

Being self-employed has plenty of perks. You can choose when you work, how much you charge for your services and you get to live a more flexible life. 

However, you don’t benefit from the financial safety nets that can be provided by an employer, such as sick pay and death in service. 

Death in service is a benefit that pays out to an employee’s family if they pass away while in employment. It typically pays out a multiple of the employees’ salary (for example, 3x). As someone who’s self-employed, your loved ones wouldn’t receive this.

It can be hard to think about what would happen to your loved ones if you were no longer around, but it’s important to think about how they would cope without your income so that you can put the right protection in place. 

Life insurance can help to provide your family with a lump sum pay out, allowing them to cover their daily living costs as well as larger expenses. 

Protect your family and their lifestyle today by getting fee-free quotes through The Insurance Expert. 

Will being self-employed affect my life insurance application?

No, being self-employed shouldn’t affect the options that are available to you, you should have the same options as someone that’s in employment. 

However, insurers will ask about your occupation during the application so. if your job involves a level of risk, this could impact your options and the price you pay.  

Insurers could see your job as ‘high-risk’ if you regularly work at heights, with dangerous machinery or frequently travel to ‘dangerous’ countries (such as those with disease outbreak or in civil unrest). 

How much life insurance coverage do I need if I’m self-employed with no employer benefits?

How much life insurance you need will depend on what you want to protect for your loved ones. 

For those in employment, receiving death in service often means they don’t need to take out as much cover and many simply take out a personal life cover policy to ‘top up’ what they receive from their employer.

However, as someone who’s self-employed you’ll need to cover all bases for your loved ones.  

You can calculate how much life insurance you could need by adding together what you’d like to protect. Common costs covered by life insurance include:

  • Income 
  • Mortgage 
  • Household bills 
  • Childcare 
  • Daily living costs 
  • Funeral expenses 

If you’re working out how much income you should protect, in life insurance the general rule is to times your annual income by 10. 

For example: An annual income of £30,000 x 10 = £300,000.

What is the best type of life insurance for self-employed workers and freelancers?

The best type of life insurance will depend on your personal circumstances, what you want to cover and your budget. 

There are different types of life insurance available, all well suited to protecting different costs and commitments. These include:

  • Level term life insurance – level term life insurance covers you for a set amount of time (the term), for example 40 years, and pays out if you pass away during this time. Your cover amount (sum assured) will remain the same (level) throughout the policy term. For this reason, it’s a great option for covering large expenses such as your mortgage, other debts, family living costs and/or your income. 
  • Decreasing term life insurance – decreasing term life insurance covers you for a set amount of time, for example 40 years, and pays out if your pass away during this time. Your cover amount decreases throughout the policy term. For this reason, it’s most commonly used to protect a repayment mortgage as the sum assured can reduce at the same rate. 
  • Life insurance with critical illness cover – life insurance with critical illness cover is a term life insurance policy (like the options mentioned above) with critical illness cover added for an additional cost in your premium. It means you can make a claim if you’re diagnosed with a specific serious illness or pass away during the policy term. When making a critical illness cover claim, the pay out could help you to replace your income while you’re unable to work. 
  • Whole of life insurance – whole of life insurance lasts for life and pays out when you pass away, not if you pass away. Due to this, it’s often used as part of inheritance tax planning or to provide loved ones with an inheritance. As cover lasts for life, it tends to be the most expensive option. 
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How much is life insurance for self-employed workers?

The price of life insurance for self-employed freelancers depends on personal circumstances and policy details, such as:

  • Age
  • Health (including your general wellbeing and medical history)
  • Smoking status 
  • Occupation 
  • Lifestyle (such as hobbies and alcohol consumption) 
  • Type of policy 
  • Policy term 
  • Cover amount 

Insurers use this information to assess your eligibility for cover and how much you’ll pay for a policy. 

Being self-employed shouldn’t impact the price of your policy but the exact details of your job could. For example, if your job is seen as ‘high-risk’ you’ll likely pay more for a policy. 

You could be considered as having a high-risk job if you work with dangerous machinery or chemicals, regularly work at heights or frequently travel to countries that are considered as dangerous (such as those at war or those with disease outbreak).

Shopping around and comparing various quotes can help you to find an affordable deal for your personal circumstances. 

How can a self-employed person get life insurance to protect a business partner or cover business debts?

Life insurance can also be used to help protect your business if you were to pass away. 

The pay out could be left to a business partner or to your family to allow them to keep it running and to cover any outstanding business debts to help keep the company going.

Depending on the type of company you have, it could be possible to take out a form of business protection. Common business protection policies include:

  • Key person insurance – a policy that can pay out if a key person in the business (such as the owner) passes away. It means that the business won’t suffer a financial loss by helping to cover any lost profit that could have occurred, as well as covering any outstanding debts. 
  • Business loan protection – this form of protection is specifically to help pay off business loans if a guarantor or key individual passes away.

Please note that business protection policies are a specialist cover option and you’ll only be able to take a policy out through an advised broker or financial advisor. 

How can self-employed workers and freelancers combine life insurance and income protection?

Combining different policy types can help to provide a comprehensive solution for you and your loved ones. 

Life insurance pays out when you pass away, but what would happen if you found yourself unable to work? 

Taking out an income protection policy alongside your life insurance can help to give you peace of mind that you’re covered for a range of circumstances. 

Income protection can pay out a percentage of your income while you’re unable to work due to illness or injury. 

You’ll receive monthly payments that can help you to keep up with key expenses, such as rent/mortgage payments, household bills and daily living costs. 

Alternatively, you could consider adding critical illness cover to your life insurance policy. You can do this for an additional fee in your monthly premium. 

It means you’ll be able to make an early claim on your policy and receive a lump sum pay out if you’re diagnosed with a specific serious illness during the policy term. You could use the money to cover any lost income while you’re off work or help with any medical costs to aid your recovery. 

What other protection policies are available to freelancers?

As a freelancer, you may wish to consider other forms of financial protection:

  • Income protection – income protection pays out a percentage of your income while you’re unable to work due to illness or injury. You’ll receive monthly payments while you’re recovering which can help to cover your monthly financial commitments and living costs. 
  • Family income benefit – family income benefit is an alternative form of life insurance. instead of paying out in a lump sum, your family could receive monthly payments if you pass away during the policy term. Payments would be made for the rest of the policy term.
  • Over 50s life insurance – if you’ve taken up freelancing in later life as a way to slow down your working life, you could consider an over 50s plan. Over 50s plans often come with a lower maximum cover amount (for example, up to £20,000) as you don’t need to provide any medical information and acceptance is guaranteed. It could leave a lump sum to your loved ones to help cover the cost of your funeral or a small inheritance.
  • Business life insurance – there are different types of business life insurance available that can help keep your business running if the worst were to happen to you. This could be particularly beneficial if you have a business partner who would struggle to keep up with business costs without you. 

Is life insurance tax deductible for self-employed workers?

Personal life insurance isn’t tax deductible, as HMRC see it as a policy taken out for personal reasons (such as protecting your family).

However, if you take out a form of business protection, the premiums could be seen as a business expense (making them eligible for tax relief). This is because the policy is set up by the business, paid for by the business and used to help the business should a key person pass away. 

Compare life insurance quotes for self-employed workers and freelancers

Life insurance can help self-employed freelancers to protect their loved ones should the worst happen. 

As you don’t benefit from financial aid from an employer, a life insurance pay out can provide vital support when your family need it most.

When working for yourself, you’ve got lots of jobs to juggle, so seeking out the right protection could easily fall to the bottom of your to-do list.

Save time and money when getting quotes through The Insurance Expert. 

You’ll be presented with multiple options from leading UK insurers, allowing you to choose the option that’s right for your circumstances. 

Find your perfect policy today. 

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