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As a freelancer or contractor you will have no sick pay (SSP) entitlement or employer-provided sickness benefits to fall back on if you are sick. So, what happens if you fall ill and cannot work?
One option is income protection insurance that can protect you from any unforeseen shortfall in income. See the details about income Protection insurance here. However this isn’t your only choice.
When ill, freelancers may be able to claim Employment Support Allowance (ESA) from the Government which is currently £73.10 per week if you are aged over 25. You can claim this for 13 weeks then there may be further entitlements.
However, if you are a limited company contractor the Government basically expect you to pay yourself SSP for 28 weeks, but you may qualify for ESA after this period. Before April 2014 small companies could recover some or all of SSP payments from the Government, but this is now not possible. It is also possible that those with their own limited company could continue to draw a salary or dividends from their company if this is possible
In 2010 research by Aviva found that two thirds of the population have no form of financial protection if they die or become critically ill. This is thought to be because of the common beliefs that:
Therefore if you should become seriously ill, and the condition continues for a long period of time, how will you and your dependents cope financially?
Income Protection Insurance is there for when you can’t work because of an accident or illness, and usually offers a monthly lump sum and covers a wide range of illnesses and conditions. Statistics show you are 4 times more likely to be off work with a serious illness than die, before you retire.
Critical Illness Cover is there when serious illness means lifelong impairment which may make work completely impossible or much less possible than before. Critical insurance provides you usually with a lump sum of money if you are diagnosed with certain illnesses or disabilities (often heart attack or stroke, loss of arms or legs, some types of cancer, organ transplants, and diseases like Multiple Sclerosis, Alzheimers, or Parkinsons).
It is there for when you are extremely ill (even if you recover fully or partially in time) or totally disabled. It may not provide cover for some diseases and may not cover you for illnesses which either you or a member of your family has had before. The cost of the insurance is quite high and is not refundable if you don’t ever need to use it.
You may not if:
What you need to check in the policy before you sign up:
You need to fully disclose the extent of your medical history when applying for the insurance (as this is a common reason for claim rejection).
Another option – you can find information about making Personal Injury Claims for injuries sustained while working.
Please note that we cannot recommend insurers or comment on individual claim issues.
If you are an Employer and need ongoing professional help with any staff/freelance issues, or a Contractor/Freelancer/Employee with a complicated employment related problem, then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.
Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.
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