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💼 Self-Employed Life Insurance

Life Insurance for Self-Employed from £5/month

4.3 million self-employed workers in the UK have zero employer death-in-service benefit. If you die, your income stops immediately. Make sure your family is protected.

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Self-employed professional protected by life insurance for their family
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Why Self-Employed People Need Life Insurance

When you work for yourself, there is no employer safety net. Employed workers often receive death-in-service benefits worth two to four times their salary as standard, but as a sole trader, freelancer, or limited company director, you get nothing.

If you were to die, your family would face several immediate challenges:

  • Your income stops instantly, there is no employer to pay out a lump sum or continue salary payments.
  • Business debts may become personal liabilities, sole traders are personally liable for all business debts, which could fall on your estate.
  • Your mortgage still needs paying, without your income, your family may struggle to keep the home.
  • Your business may need to close, without key person cover, the business itself could collapse, affecting employees and clients.

Life insurance for self-employed workers replaces the death-in-service benefit you are missing. It provides a tax-free lump sum to your family, covering lost income, mortgage payments, childcare costs, and outstanding debts.

Key fact: There are 4.3 million self-employed workers in the UK, yet the majority have no life insurance in place. Unlike employed workers, you must arrange your own protection, nobody else will do it for you.

For a comprehensive look at the cover options available, read our guide to life insurance for the self-employed.

Policy Comparison

Personal vs Key Person vs Shareholder Protection

Self-employed people may need more than one type of cover. Here is how the three main options compare.

FeaturePersonalKey PersonShareholder
Who it protectsFamily and dependantsBusinessFellow shareholders
Who receives the payoutNamed beneficiaries or trustThe businessSurviving shareholders
What it coversLost income, mortgage,Lost revenue, recruitmentPurchase of deceased
TaxPremiums not taxPremiums often taxDepends on structure; seek
Who needs itEvery self-employed personBusinesses reliant on keyLimited companies with
Typical cost£5–£15/mo£10–£30/mo£15–£40/mo

Costs are indicative for a 35-year-old non-smoker. Actual premiums depend on individual circumstances, cover amount, and policy term.

Important: If you are a sole trader, your business debts are your personal debts. Personal life insurance is essential to prevent those debts falling on your family. Limited company directors should also consider a relevant life policy for maximum tax efficiency.
Who Needs It?

Which Self-Employed Workers Need Life Insurance?

Whatever your business structure, if people depend on your income, you need life insurance. Here are the most common situations.

🛠️

Sole Traders with Families

As a sole trader, your personal and business finances are intertwined. If you die, your family inherits your debts as well as your assets. Life insurance provides a lump sum to clear debts and replace your income.

Personal life insurance essential
💻

Freelancers with a Mortgage

Your mortgage lender does not care whether you are employed or self-employed, the repayments still need to be made. Life insurance ensures your family can keep the home if you are no longer there to earn.

Level term or decreasing term
🏢

Limited Company Directors

Directors can set up a relevant life policy through their company, making premiums a tax-deductible business expense. This is one of the most tax-efficient ways for directors to get life cover.

Relevant life policy recommended
🤝

Business Partners

If your business partner dies, could you afford to buy out their share from their family? Shareholder or partnership protection ensures the surviving partner can keep the business running smoothly.

Shareholder protection + personal cover
👶

Self-Employed Parents

Your children depend on your income for everything, housing, food, education. Without employer benefits, you need to build your own safety net. Consider life insurance alongside income protection and critical illness cover.

Full protection package recommended
💳

Self-Employed with Business Debts

Business loans, credit lines, and personal guarantees do not disappear when you die. If your estate cannot cover them, your family may be left with the burden. Life insurance can be set up to clear these debts entirely.

Cover should include all debts

Not sure what cover you need as a self-employed worker?

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Costs Explained

How Much Does Life Insurance Cost for Self-Employed People?

Good news: being self-employed does not increase your life insurance premiums. Your quote is based on age, health, and smoking status, not your employment type. Here is what a healthy 30-year-old non-smoker might pay for £250,000 of cover over 25 years.

£5–£10/mo
Decreasing Term
Cover reduces over time. Ideal if you primarily want to protect a repayment mortgage or a loan that reduces over the policy term.
£10–£15/mo
Level Term
Cover stays the same throughout. Best for replacing your income for a set number of years, covering multiple debts, or providing broader family protection.
Worth knowing: Limited company directors can take out a relevant life policy through their company, with premiums treated as an allowable business expense. This can save up to 50% compared to paying from personal income after tax. See our full guide to life insurance costs.

Self-employed people should also consider income protection (which replaces your income if you are too ill to work) and critical illness cover (which pays a lump sum on diagnosis of a serious illness). Together, these three policies create a comprehensive safety net.

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Real Reviews

What Our Customers Say

James W.
James W.
Bristol • Self-Employed Life Insurance
★★★★★
“Should have done this years ago”

As a self-employed plumber with two kids, I had no cover at all. My adviser explained the relevant life policy option through my limited company, it's tax deductible so it costs me far less than I expected. Sorted in under half an hour.

Sarah H.
Sarah H.
Manchester • Freelancer Life Insurance
★★★★★
“Finally have peace of mind”

I'm a freelance graphic designer and I'd been putting this off for ages. The process was genuinely easy, I answered a few questions online, spoke to an adviser, and had a policy in place within a week. Paying £9 a month for £200,000 of cover.

David T.
David & Paul T.
Leeds • Business Partnership Protection
★★★★★
“Protected our partnership properly”

We run a landscaping business together and never thought about what would happen if one of us died. Our adviser set up shareholder protection alongside personal policies for both of us. Really professional service throughout.

Hannah B.
Hannah B.
Edinburgh • Sole Trader Life Insurance
★★★★★
“No employer safety net, now I have my own”

As a sole trader running a small bakery, I had zero protection if anything happened to me. My adviser got me £250,000 of cover for £11/month and also set up income protection. The whole thing was done over the phone in about 25 minutes.

Ryan K.
Ryan K.
Birmingham • Contractor Life Insurance
★★★★★
“Relevant life policy saved me a fortune in tax”

I'm an IT contractor working through a limited company. My adviser explained how a relevant life policy works as a business expense, I'm getting £400k of cover and paying effectively half what a personal policy would cost after corporation tax savings. Wish I'd known sooner.

Gemma L.
Gemma L.
Norwich • Freelancer Life Insurance
★★★★★
“Took the worry away completely”

I'm a freelance copywriter and single mum. Having no sick pay or death-in-service benefit was terrifying. My adviser set me up with life cover and income protection for £27/month combined. My daughter is protected now no matter what happens. Incredible service.

Learn More

Related Guides

Explore our in-depth guides on the topics that matter most for self-employed protection.

Life Insurance for Self-Employed

Complete UK guide

How Much Cover Do I Need?

Calculate the right amount

Life Insurance & Critical Illness

Combined protection explained

How Much Does It Cost?

UK pricing breakdown

Life Insurance in Trust

Tax benefits and faster payouts

Life Insurance for Mortgages

Protect your home
Got Questions?

Self-Employed Life Insurance: Frequently Asked Questions

Unlike employed workers, self-employed people have no employer death-in-service benefit. If you die, your income stops immediately and your family receives nothing from an employer. Life insurance replaces that missing safety net, providing a lump sum to cover living expenses, mortgage payments, and business debts so your family is not left financially vulnerable.
A common rule of thumb is to cover at least 10 times your annual income, plus any outstanding debts such as your mortgage and business loans. You should also factor in future costs such as childcare and education. An FCA-regulated adviser can help you calculate the right amount based on your specific circumstances. See our guide to calculating cover.
Insurers typically look at your last two to three years of accounts or tax returns. If your income fluctuates, they will usually average it. Newly self-employed individuals may be assessed on projected earnings or previous employed income. Being honest about your earnings is essential, as discrepancies could affect a future claim.
Yes. Many insurers will cover newly self-employed individuals, although some may ask for additional information such as a business plan or accountant's letter. If you were previously employed, insurers may use your former salary as a guide. The key is to apply honestly and provide whatever documentation is requested.
Personal life insurance pays out to your family or chosen beneficiaries if you die. Key person insurance is a business policy that pays out to the company if a key individual dies, helping the business survive the loss. Many self-employed people need both, personal cover for their family and key person cover for their business.
Key person insurance premiums are generally tax deductible as a business expense if the policy is taken out to protect the business against financial loss from the death of a key person. However, tax treatment depends on the specific policy and circumstances. Always consult an accountant or tax adviser for guidance relevant to your situation.
If you own shares in a limited company with other shareholders, shareholder protection insurance is strongly recommended. It funds a cross-option agreement so that surviving shareholders can buy the deceased shareholder's shares, preventing those shares from passing to someone outside the business who may not want to be involved in running it.
Absolutely. Life insurance covers death, but income protection replaces your income if you cannot work due to illness or injury. As a self-employed person, you have no employer sick pay or group income protection. Income protection is often considered even more important than life insurance for self-employed individuals because the risk of being unable to work is far higher than the risk of death.
Yes, most insurers allow you to add critical illness cover to a term life insurance policy. This means the policy pays out a lump sum if you are diagnosed with a specified serious illness, such as cancer or a heart attack, or if you die, whichever happens first. For self-employed people, this can be a financial lifeline if illness forces you to stop working.
Life insurance premiums for self-employed people are the same as for employed people, your employment status does not affect the premium. A healthy 30-year-old non-smoker can typically get £250,000 of level term cover for around £10 to £15 per month. Costs depend on age, health, smoking status, and the amount and type of cover required. See our guide to life insurance costs.
If you are a sole trader, your business debts become personal debts on your estate. This means your family could be liable for outstanding business loans, overdrafts, and supplier invoices. If you trade through a limited company, the company's debts generally remain with the company, but any personal guarantees you have given would still need to be honoured. Life insurance can cover these debts to protect your family.
Yes, writing your personal life insurance in trust is almost always recommended. It means the payout goes directly to your chosen beneficiaries without forming part of your estate, avoiding probate delays and potentially reducing inheritance tax. It is free to set up with most insurers and takes only a few minutes. See our guide to life insurance in trust.
Personal life insurance premiums are not tax deductible as a business expense. However, key person insurance and relevant life insurance policies taken out through a limited company may be treated as an allowable business expense. The tax treatment depends on the type of policy and your business structure. Speak to your accountant for specific advice.
A relevant life policy is a tax-efficient life insurance plan for company directors and employees, paid for by the company. Premiums are treated as a business expense and are not subject to income tax or National Insurance for the employee. It is essentially a death-in-service benefit that limited company directors can set up for themselves, making it highly tax efficient.
The best policy depends on your individual circumstances, your income, debts, family situation, and business structure. Leading providers include Aviva, Vitality, Zurich, Royal London, and Legal & General. An independent comparison ensures you find the best cover and price for your situation, rather than being limited to a single provider.

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