Chris Bryce, chief executive of the Association of Independent Professionals and the Self-Employed, says: “There are certain risks that are simply inherent in self-employment, and people need to consider these when starting out on their own.
"As a self-employed person, you aren’t entitled to the same benefits as employees, and you need to arrange things such as insurance yourself.”
No work, no income
The Office for National Statistics (ONS) says 137m working days were lost due to sickness and injury in 2016 at an average of 4 days off per worker.
Statistically, the self-employed are no less likely to get ill, but the loss of earnings mean they are much less likely to take time off.
The ONS statistics show the average worker took 1.9 per cent of the annual working time off due to ill health. When you break this down by employment type, employees took 2.1 per cent of their annual working time off while for the self-employed this is just 1.4 per cent.
A common workplace benefit available to employees is short-term sick pay. Many medium and larger employers will offer anything from five days to several months of sickness absence at full pay. This is separate to statutory sick pay, as the minimum to claim this state benefit is 4 days of consecutive absence.
Nick Telfer, head of products and propositions at British Friendly, says: “People in employment will generally receive some level of continuing income in the event of being unable to work due to accident or sickness.
"This will either be through statutory sick pay or a benevolent employer, which will help them deal with the impact of the resulting loss of income, at least in the short term. For the self-employed the picture is very different. As soon as they can’t work their income stops.”
Andy Simmons, senior protection specialist at VitalityLife, commented: “Generally speaking, the process of buying protection for someone who is self-employed isn’t much different from those in employment, although insurers may want to see evidence of income, such as three years’ accounts.
"For income protection, it may also make sense to choose a shorter deferred period. To give greater financial security, we offer cover starting as early as seven days – and for many conditions we’ll also backdate the payment so claimants can get paid for those seven days too.”
State benefits and the self-employed
As well as potentially missing out on sick pay from an employer, the self-employed do not qualify for statutory sick pay from the government.
Employees who are unable to work through short-term illness can claim £89.35 a week for up to 28 weeks, paid through their employer.