Sickness Insurance

mummyemmy

My husband has recently gone self-employed so we feel we need to set him up with some accident & sickness insurance. Can anyone recommend anything that isn't going to cost the earth each month!

ACG

You are probably looking at Income Protection (Also known as PHI/Permanent Health Insurance).

Most companies will offer to cover between 50 and 70% of your income. There is no one company that stands out head and shoulders above the rest. All have good and bad points. Some of the better companies though include:
Scottish Life, Aviva, and L&G.

Income Protection can be a tricky one to get right though, it might be worth seeing a financial or mortgage advisor, especially as you have recently gone self employed. You do not want to be paying for Insurance you cant claim on and you also do not want to be under insured. There are lots of different adds ons such as increasing cover and having an option to substantially increase your cover without the need for further medical info further down the line (ideal if you pick up a new contract).

Good luck with the new business :-)

rupertb_2

Congratulations on your husband going self employed I wish him all the best.

I was in a similar position this time last year, I had been trading a few months and felt it quite important to get some cover in place given I know longer had any sick pay entitlement.

I researched as you did having no prior knowledge and found premiums to vary wildly, what frustrated me more was that there were few places online I found that really explained the options to me. In the end things that really affected my cover was the length of cover I wanted and how long I wanted my deferred period to be.

I started at businesslink.gov where I go for all my self employed queries and although it gives an overview of the insurances you should consider when going self employed there is little detail.

Doing an extensive search online I found three other really useful sites which laid out the different options available.

The FSAs guide to income protection, has a good example of budget calculations and how you should come to a decision on how much income you would need to protect.
http://www.moneymadeclear.org.uk/products/insurance/income_protection.html

Came across this company in Google, look they they specialise in income protection and the site answered most of the questions I had, provides a good overview of differences between short and long term cover.
http://www.drewberryincomeprotection.co.uk/income-protection-cover/self-employed-income-protection/

A general guide which provides useful information on how the products are priced and what to look for in the small print.
http://www.find.co.uk/insurance/life/income_protection_guide

Hope this helps, I know how much there is to think about when starting out.

dunstonh

PHI is certainly the better option for self employed rather than PPI (which is what you see on the internet). There is very little coverage of PHI on the internet. Partly as often its application process is paper based and quote sites dont like that. Plus, its underwritten at point of sale (unlike PPI) so it takes a bit longer to set up. Plus, it tends to come in different levels of cover. So, is a bit more complicated than PPI. PHI is very much classed as an IFA product as far is distribution is concerned.

Also worth considering is pension provision. I know its unrelated to your post but your husband may not be aware that the self employed get less state pensions than an employed person. The difference over a full working life equates to a pension pot of around £120k - so its no small amount lost). Many self employed don't realise this until it is too late. One of the reasons self employed pay less NI and tax is that the Govt believe they want more control in their finances and not be as reliant on the state. So, the lower tax/NI is not extra in your pocket to spend but to allow you to make your own provision.