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

Yes, it’s completely possible to secure family life insurance if you’re self-employed.

As of March 2023, there are around 4.39 million self-employed workers in the UK[1].

Whether you have an employer or are self-employed won’t have an impact on your ability to secure life cover.

The only time your occupation is likely to have an impact on your cover is if you work in a high-risk occupation.

While being self-employed can mean having to complete more paperwork in your daily life, Reassured can take the stress away from arranging your life insurance.

We can compare quotes and help you secure the right policy to meet your needs from just 20p-a-day.

What is self-employed life insurance?

Self-employed life insurance isn’t a life insurance product in its own right.

It simply refers to a life insurance policy that's taken out by someone who’s self-employed.

There are many reasons those who’re are self-employed choose to take out life cover and the options available to them don’t differ to those who work for an employer.

How does life insurance for self-employed people work?

Life insurance for self-employed workers will work no differently to any other life insurance policy.

Life insurance can work as simply as:

Friendly Helpful

Contact a friendly member of our team to get your application started. We can compare quotes from a wide range of providers to find you our deal.

Planning the funeral your way

Once you’ve chosen the right policy and your application has been accepted, your life cover will commence.

Cost Money Quotes

You’ll need to continue to pay your monthly life insurance premium to keep your cover valid.

Telephone

If you pass away during the term of your policy, your loved ones can notify your provider of the death and make a claim.

Debts

On receipt of a successful claim, the provider will pay out a lump sum to your loved ones.

Peace of mind

Helping to provide you with peace of mind that your loved ones are taken care of financially should the worst happen.

Is life insurance worth getting if you’re self-employed?

Generally speaking, having adequate life cover is important for anyone with dependants, (a partner and/or children).

Many individuals in employment receive death in service, this is a benefit paid by your employer to your family if you pass away (usually a multiple of your salary).

However, due to the nature of being self-employed, this benefit isn’t available to you. Meaning if the worst were to happen, your loved ones wouldn’t receive financial aid.

This is where life insurance can be extremely beneficial for self-employed workers as it will pay out a cash lump sum to your loved ones which can be used to help make ends meet after your passing.

Without life insurance, your loved ones would have to:

  • Replace lost income - £157,562 is the average cost of raising a child until 18[2]
  • Meet mortgage repayments - £142,755 is the average UK mortgage debt[3]
  • Pay for additional childcare - £285.31 the weekly cost for full time childcare[4]
  • Cover the cost of your funeral - £9,200 average total cost of dying[5]

There’s also an increased need for life insurance if you work in a high-risk self-employed occupation, such as:

For applicants with high-risk occupations, Reassured also have a dedicated impaired risk team who can help those previously declined.

How much life insurance do you need if you’re self-employed?

How much life insurance you need will depend on what you’d like to protect and your available budget.

For those in employment, receiving death in service benefit can help to reduce the amount of personal cover that’s required as these two forms of cover can work together to provide a fully comprehensive solution.

However, as discussed, self-employed workers don’t receive this benefit so it’s important to ensure that the amount of cover you secure is the right amount to cover all aspects for your loved ones.

Take some time to consider your circumstances and what aspects of your life you want to protect to answer the question how much life insurance do you need?

What do you want help protecting?


What are your personal circumstances?

  • How much mortgage balance is outstanding?
  • How many children do you have?
  • How old are they?
  • What is your partners employment status?
  • What savings/assets do you have?

How long do you need cover?

  • Until your mortgage is paid off
  • Until your children are financially independent
  • Until you retire
  • For the remainder of your life

Enlisting the help of an expert, like Reassured, can help you to determine the level of cover you require.

Our award-winning team can talk through your personal circumstances and reasons for wanting to take out cover.

We can then provide you with information about our most suitable options and guide you through the application process.

Simply get in touch for your personalised and fee free quotes.

How much cover do self-employed workers need?

Enter your financial commitments below to understand the level of self-employed life insurance cover you need.

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£137,934 is the estimated mortgage debt per household in the UK.

The purchase of a home is likely to be the largest financial commitment any of us will make in our lifetime. Your life insurance should cover your remaining mortgage balance to allow your loved ones to stay in the family home should anything happen to you.

Source: Moneynerd.co.uk

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The average monthly household budget in the UK is £2,548 (that’s £30,576 per year), which is spent on transport, food & drink, utilities (gas, electricity, water etc), clothing, council tax and leisure activities.

With energy prices hitting a record high and the cost of living rising sharply in the UK, you may wish to factor in utility bills and family living expenses into your cover.

Source: Nimblefins.co.uk

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The average personal debt of UK adults has risen to £34,566 (not including mortgage debt), with credit cards, personal loans and overdrafts being the most common forms of debt.

Factoring in any debts into your life insurance cover means that, if they need to be paid back from your estate after your passing, your loved ones won’t miss out financially.

Source: Money.co.uk

£
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According to SunLife, the average cost of a funeral in the UK is £3,953 (with the overall cost of dying at £9,200).

Funeral costs have increased by 116% since 2004 and are a significant cost which should be factored into the amount of life insurance you secure.

Source: SunLife.co.uk

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When factoring in cover for your children, you may wish to calculate the amount based on how long it is until they reach financial independence.

This could include childcare (£7,000 per year for part-time care), school expenses (£1,519 per school year for uniforms, lunches, stationary etc), as well as an additional sum for further education (this could be a contribution of up to £5,000 per year).

Sources: Daynurseries.co.uk, Primarytimes.co.uk & Savethestudent.org

£
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2 in 5 adults say they are relying on an inheritance to fund their retirement.

Factoring in an inheritance to your sum assured could allow loved ones to live a more financially comfortable life. Alternatively, you could leave a cash gift to a charity of your choosing.

Source: Moneyage.co.uk

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If you’re lucky enough to have your own savings or are part of the 30% of UK residents who already have a life insurance policy in place, this can provide financial protection for loved ones.

By entering your current cover, savings or death in service amount you can reduce the sum assured you require.

Source: Scottishbusinessnews.net

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Your total cover estimate

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Let us find you our best quotes.

What is the best life insurance for self-employed?

The best life insurance for you isn’t dependent on whether you’re self-employed or in employment.

Instead, the best option for you will be the policy that covers everything you need it to and is at a price within your budget.

There are a number of different policies available, each better suited to protecting different aspects of your life. These include:

  • Term based life insurance
  • Family income benefit
  • Whole of life insurance
  • Over 50s plan

There are also additional forms of cover you may want to consider taking out alongside your life insurance policy:

  • Terminal illness cover
  • Critical illness cover
  • Income protection
  • Health insurance

Keep reading to determine the best type of life insurance to meet your unique needs…

Types of life insurance for self-employed

Term life insurance

Term based life insurance provides cover for a specified period of time (the term). If you pass away during this time, a pay out is made to your loved ones.

There are two common types of term-based cover:

Level term life insurance provides a pay out which holds its value throughout the lifetime of the policy, helping to cover fixed costs such as an interest only mortgage, living costs, funeral costs or providing an inheritance.

Decreasing term life insurance provides a lump pay out which reduces in value throughout the policy term.

Therefore, it’s ideal for helping to protect a repayment mortgage as your sum assured can reduce in line with your remaining mortgage balance. This is also the cheapest form of cover.

At Reassured, we can help you compare both level and decreasing term life insurance quotes.

Over 50s plan

Over 50 life insurance offers lifelong cover and provides guaranteed acceptance to UK residents aged 50 - 85 and requires no medical information.

This can be a great option for self-employed workers in this age bracket who’ve previously struggled to get cover due to ill health.

However, the sum assured is significantly lower than other policies due to the unknown risk to the insurer (often capped at £20,000).

It’s also likely that a waiting period will be added to your policy, meaning it won’t pay out if you pass away within the first 12 - 24 months. Any premiums paid will be refunded to your loved ones.

The most common age bracket for self-employed workers is 45 - 54[6] with this in mind, those in their 50s may want to consider other types of cover to help protect all aspects of their life are covered.

Reassured can find you suitable cover from our panel of insurers.

Whole of life insurance

Whole of life insurance provides lifelong cover and guarantees your loved ones a pay out when you pass away (not if).

This can help to cover funeral costs, family living costs or provide an inheritance.

If taking cover out at a young age it can be possible to pay more into the policy than it will pay out, as you’ll need to pay premiums until you pass away.

For this reason, this type of cover is best suited to those later in life, who’re in good health.

Whole of life insurance is ideal in helping to provide an inheritance for your loved ones.

Family income benefit

Family income benefit is a term-based policy which provides your loved ones with monthly, tax-free payments should you pass away during the policy term.

Your family will receive continued payments until the policy comes to an end.

For example, if you have a 20 year policy and you pass away 5 years into the policy, it will pay out for the remaining 15 years.

It’s ideal for helping to replacing your self-employed income if you were no longer around to provide for your family and can help with long term budgeting.

Additional policy types:

Terminal illness cover
This comes free of charge with all term policies secured through Reassured.

It can allow you to make an early claim on your life insurance policy if you’re diagnosed with a life-threatening illness and given less than 12 months to live.


Critical illness cover
Critical illness cover can provide a lump sum pay out upon the diagnosis of a serious illness (that’s listed within the policy). This can help to replace lost income or fund medical treatment.

Cover can be added to a life insurance policy for an additional fee or purchased as a standalone policy through some providers.


Income protection
Income protection insurance can pay out to you if you’re unable to work due to accident or sickness.

As a self-employed worker, this can help to provide essential financial aid while you’re unable to earn your usual income.

While this policy type can’t be added to a life insurance policy, both can be taken out simultaneously to provide an all-encompassing cover solution.


Health insurance
This can pay out to you to fund private medical treatment, including surgical and dental.

Cover can give you access to some hospitals or specialists that aren’t offered by the NHS.

We can’t currently arrange health insurance for you at Reassured.

How much is life insurance for self-employed?

At Reassured we can arrange standard life insurance from as little as 20p-a-day.

The exact price you pay will be determined by the level of risk you pose to the insurer (the likelihood of a claim being made).

Key factors taken into account by insurers when calculating your monthly life insurance premium include:

  • Age
  • Health & wellbeing
  • Smoking status
  • Weight
  • Type of cover
  • Amount of cover (sum assured)

Insurers may also ask questions about your occupation to determine the level of risk involved. For example, whether you work from heights or work with heavy loads etc.

If any high-risk factors are identified, you may experience having your premiums inflated as a result. But rest assured you can still secure the cover you need.


The table below shows example quotes for a self-employed worker. Quotes are based on a non-smoker in good health, working in a low-risk occupation, for a level term and decreasing term life insurance policy with a term length of 20 years for £100,000 of cover:

AgeDecreasing term life insuranceLevel term life insurance
20£4.36£3.61
25£4.92£4.73
30£4.99£4.82
35£5.09£6.00
40£6.05£7.87
45£8.10£11.07
50£10.99£16.18


To ensure your loved are fully protected, contact us to compare quotes from some of the UK’s best life insurance providers - we can help you to save time and money.

Is life insurance tax-deductible for self-employed?

As a self-employed worker and/or the director of a limited company you’ll be able to claim some forms of life insurance as a business expense.

Life insurance policies that can be claimed as a business expense are typically business life insurance policies such as a relevant life insurance policy or a keyman insurance policy.

These are policies that can be taken out and paid for by a business, and therefore can be classed as an allowable business expense.

A personal life insurance policy can’t be claimed as a business expense and will need to be paid for using your own funds.

Is life insurance or income protection better for self-employed workers?

Life insuranceIncome protection
Pays out in one lump sum to your loved onesWill pay out monthly payments to you
Will pay out if you pass away during the policy termWill pay out if you’re incapacitated and unable to work
Sum assured up to £1,000,000Sum assured (or benefit amount) up to 70% of your usual income
Will pay out for a wide range of deathsWill pay out for a wide range of illnesses and injuries
Pay out to can help to pay off the mortgage, cover family living costs, pay for your funeral or it can be spent how they wishPayments can be used to help fund daily living costs, keep up with mortgage or rent payments, cover household bills (whatever your income would typically cover)
Premiums from 20p-a-day through ReassuredPremiums from 20p a day through Reassured


It’s not necessarily a case of life insurance vs income protection as both differ in terms of what they cover and when they pay out.

Income protection provides regular (tax-free) payments to help replace your income while you’re unable to work (as a result of sickness or accident).

This can be particularly important for self-employed workers who don’t receive sick pay as you can ensure that you and your family won’t experience financial strain.

Typically, up to 70% of your usual income could be paid out to you after your chosen deferred period has come to an end, but this can vary depending on the provider.

Whereas a life insurance policy will pay out to your loved ones after your passing, in one lump sum payment.

Due to the different benefits of each, if it’s within your budget, it can be beneficial for self-employed workers to have multiple policies.

We have a full income protection for self-employed guide, so why not check this out?

If you think income protection might be the right option for you, why not compare quotes from all major UK providers using the services of Reassured?

Is health insurance better than life insurance for self-employed workers?

Life insuranceHealth insurance
Will pay out to your loved ones upon your deathWill pay out to you to fund medical, surgical or dental treatment
Offers different policy options (eg. term based cover, whole of life insurance, over 50s plan etc)Offers different policy options (eg. individual cover, couples cover, family cover etc)
Pay a monthly premium to keep cover validPay a monthly premium to keep cover valid
Can be purchased through Reassured from just 20p-a-dayWon’t cover you for pre-existing conditions


Again, life insurance and health insurance are two different policies with two different purposes.

A life insurance pay out will be issued to your loved ones upon your death, whilst health insurance will pay out to you if you require medical, surgical or dental treatment.

It pays for privately funded treatment and offers different tiers which will affect what types of treatment are covered.

With the option of the NHS, it’s often deemed that health insurance is less important than life insurance.

However, health insurance could be particularly beneficial for self-employed workers who take part in physically demanding jobs.

It’s not always a case of life insurance vs health insurance, if it’s within your budget, there are merits to having both forms of cover simultaneously.

Health insurance isn’t something that’s currently offered by Reassured.

Should my self-employed life insurance be a joint policy?

If you have a partner or spouse, taking out a life insurance policy on a joint basis can help you to save money, (a joint policy costs on average 25% less than two single policies).

However, there some important factors you may want to consider before opting for joint life insurance cover.

Firstly, a joint policy will only pay out once and then the cover will expire. This means that if one partner passes away, the other will be left to secure new cover at an older age (which could mean pricier premiums).

Secondly, if you work in a high-risk occupation, you may experience increased premiums due to the greater risk. As a joint policy requires you to pay just one premium between you both, your low-risk partner will need to contribute to these increased premiums (meaning they could be paying more than is necessary for them).

It’s always recommended to compare quotes for both a joint policy and two single policies to determine the best option.


The table below shows a price comparison between one joint life insurance policy and two single policies. Quotes are based on non-smokers in good health, with low-risk occupations, for a level term policy with a 20 year term for £100,000 of cover:

AgeJoint policyTwo single policies
20£6.25£7.22
25£7.13£9.46
30£8.79£9.64
35£10.58£12.00
40£14.30£15.74
45£21.08£22.14
50£31.53£32.36


Contact our team for a full joint vs two single policies comparison.

Will smoking affect my self-employed life insurance?

Due to the associated health implications, smoking can impact the price you pay for your policy.

This also applies to vaping, e-cigarettes and other nicotine replacement products.

How much your premiums are increased will depend on your personal circumstances, for example:

  • How long you’ve been smoking
  • How often you smoke
  • Whether you’ve developed any medical complications
  • Whether any other high-risk factors are identified

While you may experience increased premiums, rest assured it’s unlikely that you’ll be declined for life insurance due to smoking alone and it’s still possible to secure the cover you need.


The table below shows the price comparison between a smoker and a non-smoker in good health. Quotes are based on a level term policy with a 20 year term for £100,000 of cover:

AgeSmokerNon-smoker
20£4.02£3.61
25£5.45£4.73
30£6.76£4.82
35£9.69£6.00
40£15.52£7.87
45£24.71£11.07
50£39.57£16.18


Reassured has helped over 100,000 smokers find affordable life cover, get in touch for your FREE quotes.

Should I write my self-employed life insurance in trust?

Writing your life insurance in trust can offer many benefits to self-employed workers.

This is a process that can detach your life insurance policy from your estate.

Instead, a trustee (who has been nominated by you) will be placed in charge of the pay out after your passing and will distribute the funds as per your wishes.

Writing your life insurance policy in trust has the following benefits:

  • Reduce/avoid inheritance tax for your loved ones (charged at 40% over the £325,000 threshold)
  • Bypass the probate process (resulting in a faster pay out for your loved ones)
  • Have more control over your pay out (specify how you would like the proceeds to be distributed)

Reassured’s FREE trust writing service

Writing your life insurance policy in trust doesn’t have to be challenging.

At Reassured we offer our self-employed customers a free trust writing service with the majority of policy types that we offer.

A member of our dedicated team can take you through the process and answer any questions you have, providing you with complete peace of mind.

Why not get in touch to find out more?

What insurance do you need if you’re self-employed?

As well as the life insurance and the additional financial protection policies we’ve discussed in this article, there are some other insurance policies that may want to be considered by those that are self-employed.

The insurance policies that you need will vary depending on the industry that you work in.

Other types of insurance for self-employed workers include:

  • Professional indemnity insurance
  • Equipment insurance
  • Public liability insurance
  • Product liability insurance
  • Buildings and contents insurance

Unfortunately, these aren’t policies that we can compare for you at Reassured.

Support for self-employed workers

Compare life insurance for self-employed quotes

As a self-employed worker you work every day to provide for your loved ones, but have you secured their financial future yet?

At Reassured, our award-winning team can compare quotes from some of the UK’s leading providers to help you find our best deal.

We’re also on hand to answer any questions you might have and decode any jargon.

Our FCA-regulated life insurance broker service provides personalised and no obligation quotes.

Get in touch today to secure your free quotes and take one step closer to protecting your family.

Sources:

[1] https://www.statista.com/statistics/318234/united-kingdom-self-employed/

[2] https://cpag.org.uk/sites/default/files/files/policypost/Cost_of_a_child_2022.pdf

[3] https://www.finder.com/uk/life-insurance-statistics/

[4] https://www.daynurseries.co.uk/advice/childcare-costs-how-much-do-you-pay-in-the-uk

[5] https://www.sunlife.co.uk/funeral-costs/

[6] https://www.statista.com/statistics/318435/self-employment-uk-age-group/

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