The top financial challenges faced by entrepreneurs today
Taking the leap to become self-employed is an exciting one. Self-employment brings with it many freedoms including flexible working hours, working from home, possibly decreasing your commute and the excitement that comes with the responsibility of your business’s success.
Today in the UK, there are nearly five million self-employed workers. However, as well as all of the positives, there may be cons to being self-employed as well. These cons include employment security and lack of sick pay to name a few.
Mike Perry, CEO at PG Mutual, discusses the potential impact of sick leave on the finances of self-employed workers, and the cover you need to help you meet your financial commitments while you recover.
If you’re self-employed, it’s imperative to take a look at your financial safety net to ensure you’re prepared for unexpected difficulties, such as illness or injury that may come your way.
Sick pay and self-employment
According to a recent survey, the government is the most commonly trusted source of financial support (57%) followed by employers (50%) for families.
However, being self-employed, relying on an employer isn’t an option. Instead, you may find yourself relying on your savings or Employment and Support Allowance (ESA). Based on data collected for the Protecting Our Families Report, it’s often underestimated as to the level of support ESA can provide. ESA is subject to assessment and can provide those that are found to be eligible and are off work due to illness or disability with just £109.30 per week.
In the same survey, nearly one in four (27%) families have experienced a loss of income due to ill health reasons and had to downsize, move back in with family, rent or become homeless as a consequence, while 6% took on debt from a non-high street lender.
The effects of income loss could cause ripples in our professional and personal lives putting all we’ve worked for at risk.
With this in mind, have you evaluated lately how you’d keep everything afloat if you found yourself in this situation? Would your savings or ESA be enough to carry you through?
What is income protection insurance?
Income protection insurance is a long-term insurance policy that is designed to provide you with a regular income if you were unable to work due to illness or injury. Typically, this ranges between 50%-100% of your gross salary, depending on your needs and the policy you have.
Income protection insurance continues to replace a percentage of your income until you’re able to return to your professional career or until you reach retirement age (whichever is sooner).
With income protection, there isn’t a penalty to claiming and you’re able to claim as many times as you need. Also, you can choose to be covered from day one or you can select a deferment period of your choice (such as one week or six months).
Having income protection insurance if you can’t work due to illness or injury could prove to be the necessary antidote if you’re self-employed, providing you with a financial safety net due to a lack of sick pay that could prevent exhausting savings, having to borrow from family, or taking on loans just to carry you through recovery, not to mention keeping your business going.
What should I do next?
If you’ve established that income protection cover is something would be a benefit to you, don’t wait until it’s too late.
At PG Mutual, we can provide Income Protection Plus at an affordable monthly cost that can cover up to 70% of your gross salary should you find yourself in a situation of being unable to work due to illness or injury*. This can give you peace of mind that, no matter what comes your way, you’ll be able to cover the bills and focus on what’s important: recovery. If you’d like to learn more about Employment and Support Allowance (ESA), you can visit the government's online service.
Find out all of the benefits to our Income Protection Plus plan by visiting PG Mutual.
Plus, you can find out instantly just how little Income Protection Plus could cost you by receiving a quick quote. Be sure to use your “ICAS” code to receive 20% discount off your first two years’ premiums.
About the author
Mike has over twenty five years’ experience in financial services, having worked with large corporate organisations as well as being a successful consultant within the Mutual sector. He previously held a variety of senior management and Board roles in Sales and Marketing with the Skipton Building Society Group. As a consultant, Mike worked with a number of Building Societies to assist in increasing business and staff development, within a regulated environment.
*Visit us online for full terms and conditions.
This blog is one of a series of articles from our commercial partners.
The views expressed are those of the author and not necessarily those of ICAS.