Updated: October 08, 2019

Life Insurance for the Self-Employed

Self-employed professionals often have specific requirements when it comes to life insurance. Find out how to secure a policy that fits you needs in our guide

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: October 08, 2019

Being self-employed can come with a lot of perks. The freedom to work on your own terms, manage your own time and an unlimited income potential are all great draws but the freedom of freelancing or running your own business isn’t entirely worry free.

Many self-employed professionals find themselves fearing that without a pension or a payout from an employer for Death in Service cover, their families could be left in financial hardship if they were to die unexpectedly.

That’s why many people turn to self-employed life insurance. But with so many options and policy variations, how can you be sure that you’re getting the right cover at the best price?

Can I get life insurance if I’m self employed?

Yes, a sizeable 14.8% of the working population was self-employed in 2018, so it’s no wonder we receive so many enquiries from self-employed workers looking for advice about life insurance.

Some of the people we speak to can gain even greater benefits from income protection insurance or critical illness cover, which pays out a lump sum if the policy holder becomes too sick or is unable to work due to injury.

However, for the majority of self-employed professionals who come to us, life insurance can provide a greater level of financial cover and peace of mind that their loved ones will be financially supported in the even of their death.

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How can I find the best self-employed life insurance?

You could save a lot of time and money by working with an advisor as they can quickly identify and compare the insurance companies which can provide you with the most beneficial cover for the best price.

Lots of people turn to online comparison websites to find the best deal but, frustratingly, these don’t always provide an accurate picture since they work to very rough guides and are unable to take into account every nuance of your personal circumstances.

To get a true understanding of how much your self-employed life insurance will cost, the insurance company needs details about your health, medical history and personal circumstances.

It is only upon gaining these accurate details, that an insurer can provide you with a true quote based on fact.

To avoid having to apply to multiple insurance companies and compare the costs and contracts yourself, call an expert on 0808 189 0463 or make a quick enquiry.

The advisors we work with can calculate your costs for you, save you the hassle of researching and comparing quotes and ensure you’re getting the absolute right cover at the best available price.

What types of self employed life insurance are there?

There are two main variations of life insurance and self-employed workers are no less eligible for them than anyone else:

  • Term cover– This type of policy has a specified time period and once this date is reached, the contract and life insurance agreement ends. If you die within this time frame,  your family will receive a payout. However, if you die after the agreement date, no protection will be provided.
  • Whole of life cover – This policy is provided throughout the life of the policy holder, as long as the terms and conditions of the agreement are upheld and premiums are paid on time. This cover can be more expensive but the price reflects the level of financial protection that this type of policy can pay out.

Is there life insurance for company directors?

Many companies provide benefits to their employees including pension contributions and death in service payouts.

As a company director, you may not have considered how life insurance, or a lack of it, could affect you and your family financially.

Without the safety net of a death in service payout, many business owners opt for their own personal company directors life insurance policy, but by doing this, you may miss out on potential tax benefits.

Is life insurance tax deductible if you’re self-employed?

Potentially yes. Depending on your circumstances, it may be possible to deduct your life insurance costs through your tax return if you own a limited company or are self-employed.

Some business owners or self-employed professionals obtain life insurance tax-efficiently through their business, as this allows them to claim it as an expense

This can provide a great sense of relief for many self-employed individuals but it can also save money.

As long as you, as the business owner, can prove that the purchase of life insurance was wholly and exclusively for the purposes of trade, you should be able to claim it as an allowable business expense which in turn, can reduce your tax bill.

What about if I’m a company director?

If you’re a company director and pay for life insurance through your company instead of out of you taxable personal income, you could save around 50%, which could total thousands of pounds over the duration of a life term policy.

Setting up a Relevant Life Policy, paid for directly by the company for the director, means the premiums should be an allowable business expense and the company can therefore claim corporation tax relief and you also avoid paying National Insurance on the premium amount.

To learn more about life insurance for limited company owners and tax deductions, talk to an expert advisor on 0808 189 0463. We’ll match you with an insurance expert who can answer all your questions and get you the cover you need.

Life insurance for contractors

In the UK, there are approximately 1.77 million full-time contractors at the time of writing, each working and supplying their goods and services in return for income.

Like many self-employed professionals, contractors worry about how their families would cope in the event of their death.

To provide financial security for their children or loved ones, many take out contractor life insurance.

In the event of your death, this type of insurance can be used by your beneficiaries to:

The premiums for contractor life insurance are usually paid personally although it may be possible to deduct this expense through the business.

To find out more about contractor life insurance, speak to an advisor who can compare the market to find you the best level of cover at the most competitive price available.

Speak to an expert broker about self-employed life insurance

The advisors we work with are qualified professionals who understand the importance of life insurance and your need to protect your loved ones and your assets in the event that you die unexpectedly.
For a confidential, no obligation chat, call 0808 189 0463 or send a quick online enquiry.

Ask A Quick Question

We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in life insurance. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

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FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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