Freelance Sick Pay. It exists!
Have you been tempted to ‘go freelance’ or become a sole trader before? Has one of the downsides in your decision-making been the lack of sick pay?
Yep! I’m feeling ya. I started my freelance business six years ago. Back then, there were so many advantages for choosing self-employment, and even more so now I’m a Mum, though the one main draw back for me, apart from the potential uncertainty of work, was the lack of sick pay.
Since becoming a parent, any time I’ve been unwell, more often than not I’ve had to ‘work through it’. I’ve not had the time needed to fully recover. Usually I will have to either postpone the freelance work, turn it down or struggle on through – often resulting in a backlog or worse still, missed opportunities. Worse, I’ve often felt unsupported and unable to do the right thing for my wellbeing at times
Back in 2012, when I first became freelance, I remember asking around to see if anyone had heard of an insurance policy to cover freelancers in times of need. I discovered critical illness cover – often taken out in conjunction with life insurance, which covers you for any serious health issues, especially any life threating illnesses. But there wasn’t any thing for day to day sickness – like when you catch a nasty cold or chest virus that floors you for a couple for weeks.
Then, recently I came across a policy that was perfect. Income protection. It’s effectively the same as sick pay but for the self-employed.
It’s not offered by many providers, which is possibly why it didn’t come up in my searches at first.
What is Income Protection Insurance?
Income protection insurance, which is occasionally also known as permanent health insurance, is an insurance designed to help you if you can’t work because you’re unwell or injured.
If you need to stop work, you’ll receive a regular income. I’ve opted for a cover that pays out for up to 12 months. But you can also select a cover that allows you to receive a regular income until you retire or are able to return to work.
There are some great policies around and the one which I felt suited me the most was one from April UK.
The guys at April UK were really helpful. They were recommended to me via the Association of British Insurers. April UK us an independent UK company who specialise in health, life and income insurances and who have been operating for 20 years. Jo Fry was my main contact and she was super friendly and really helpful to deal with.
I had a few questions about the policy and this is what I discovered!
The Nuts and Bolts
Unlike other income protection plans, this plan is not based on your earnings at all, it is based on what you would like cover for.
You can receive cover for up to £1,500 a month (tax free) but this is the maximum threshold. There is no excess to pay and you can make multiple claims throughout the year should you need to (hopefully not!).
The maximum pay out for any claim is 12 months, (except Hospitalisation is 30 days per year) but after 90 days back to work, you could theoretically claim again if the same condition reoccurred and you needed to be off again.
How do you make a claim?
You complete a claim form, receive a ‘sign-off’ from your GP and then supply an invoice, bank statement or something from an accountant to show that you are or were actively working prior to claim.
It covers any sickness that stops you being able to do your job – obviously there are exclusions so drug or alcohol related, stress etc, deliberately self-inflicted things.
The policy covers any new sicknesses you experience and pre-existing sicknesses are covered once you have gone 2 years clear without symptom, medication check or treatment of when you last had it.
You can cancel at any time, ultimately it will cover you until age 68 or retirement.
You can’t make a claim within the first 60 days of your policy. So, arguably a good time to take out a policy would be during the late spring or summer, in preparation for the autumn and winter. You must also have been unwell for a minimum of 2 weeks to make a claim. But you can claim as many times as you need to in one year.
So if you catch the flu, a chest infection and have an injury all in one year, and need two weeks or more off for each occurrence, you could receive a payout for around £4,500 (minimum).
The other thing that I liked the sound of was that, unlike many other types of insurance policies, the premium won’t automatically increase every year or if you make a claim.
In fact, the only way it may change is if the government increase Insurance Premium Tax (IPT) but that would only be a percentage or two, or if the insurer decides to apply an increase across the portfolio of plans due to a higher than expected claims influx. Other than that, it doesn’t matter how many claims you may personally make, or the fact you will be getting older each year, it will not change.
I was dead impressed by that!
It depends on your age and other factors but it’s around £40 a month. You can cancel at any point, you just need to give a month’s notice.
For more go to https://www.april-uk.com/
APRIL UK, April House, Almondsbury Business Centre, Bradley Stoke, Bristol, BS32 4QH.
0800 028 0849