Protect Your Income and Your Peace of Mind: A Vital Tip for Sole Traders

As a sole trader, your business is your livelihood. Whether you're a consultant, a freelancer, or a small business owner, the income you earn is directly tied to your ability to work.

But have you considered what would happen if, due to an unforeseen illness, injury, or accident, you were suddenly unable to work? Without a backup plan, your income could disappear, leaving you and your family in a critical financial situation.

That’s where Income Protection Insurance comes into play—a safety net that every sole trader should consider.

Income Protection Insurance is designed to provide you with a regular income if you’re unable to work due to illness or injury. This can cover a range of circumstances, from critical illnesses to unexpected accidents, and gives you the financial support you need while you recover.

For sole traders, your ability to work is your most valuable asset. Unlike employees who often have access to sick pay or other benefits; as a sole trader, your income stops if you can't work.

This makes you particularly vulnerable to financial hardship in the event of illness or injury.

Regrettably I’ve seen firsthand how difficult this situation can be.

I’ve worked with tradesmen who, despite serious injuries or illnesses, couldn’t take the time off they needed to recover because they were the sole income providers for their families.

The pressure to keep working, even when unwell, can slow recovery and lead to long-term health issues, and that ultimately affects both personal well-being and business sustainability.

By taking out Income Protection Insurance, you can ensure that if something were to happen, you’d still have a source of income which covers your day-to-day living expenses and allows you to focus on your recovery without the additional stress of financial worries.

Tax Deductible Premiums

Here’s a bonus: the premiums you pay for Income Protection Insurance can be deducted from your sole trader profits, reducing your taxable income. This means you not only protect your income but also benefit from tax savings.

Understanding Pre-Existing Conditions

You’re probably already aware that many insurance companies won’t cover you for pre-existing conditions.

However, there are policies available that may only exclude these conditions for a certain period. This means that while these conditions may not be covered initially, after a set period, your coverage might extend to cover them.

To navigate the various options and find a policy that suits your needs, it's advisable to speak with a Protection advisor. They can help you understand the fine print, compare policies, and ensure you get the best coverage for your situation.

As your accountant, my role is not just to help you manage your finances but to ensure you’re protected against potential risks that could impact your financial stability.

Income Protection Insurance is a sensible investment in your future, offering you the security that if life shoves a stick through your spokes, your income is protected, and your business can continue.

Speak to a Protection Advisor, explore your options, and consider how Income Protection Insurance could benefit you.

If you have any questions or need further information on how this can be applied to your tax situation, feel free to get in touch. Your financial well-being is our priority, and we at Anlo are here to help you every step of the way.