Essential guide to income protection for contractors and self-employed professionals. As a contractor, you don't receive employer sick pay - your income stops immediately if you can't work. Income protection insurance covers up to 70% of your income with tax-free monthly payments if you're unable to work due to illness or injury. Prove your income via tax returns (SA302) or accountant's accounts and compare quotes from 50+ UK providers through LifePro's whole of market service.
By: Lorna Bailey Protection Expert Updated: 2nd January 2026
The thought of not being able to work due to long term sickness is a scary prospect for anyone, but especially those who don’t receive sick pay.
As a contractor, it’s unlikely that you’ll benefit from sick pay during periods of ill health, meaning you’ll need to rely on your own savings or government support like ESA (Employment and Support Allowance) to get by.
Securing an income protection policy can allow you to protect a percentage of your earnings to assist you keep up with daily living costs and financial commitments.
Up to 70% of your income could be paid out in monthly, tax-free, payments while you’re unable to work due to illness or injury.
Why not compare income protection quotes through LifePro's advised team?
Using their whole of market comparison service you can discover the best policy to meet your needs at the right price for your budget.
Quotes are fee-free, personalised and without obligation. But the best part is that quotes start from just 20p-a-day ‡ . Simply contact us today.
How much income protection do you need?
The amount of income protection insurance you need depends on your individual circumstances and financial commitments. Most experts recommend covering 50-70% of your gross annual income, as this typically provides enough to maintain your standard of living if you're unable to work due to illness or injury.
When calculating how much cover you need, consider:
Your monthly mortgage or rent payments
Household bills and utilities
Childcare costs
Loan repayments and credit card bills
Daily living expenses for your family
Any savings you have that could cover short-term absences
Remember that income protection payments are tax-free, so you may not need to replace your full salary. The key is ensuring you can maintain your essential outgoings and standard of living during a period when you're unable to work.
To get an accurate quote tailored to your needs, use our free comparison service to compare quotes from 50+ UK providers, including Income Protection For Contractors.
Why should contractors secure income protection through LifePro?
Whole-of-market comparison from 50+ UK insurers
Expert advice from FCA-regulated advisors
No extra cost - insurers pay our commission
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Support throughout your policy lifetime
What is the best income protection for contractors?
Thebest income protection insurancefor contractors will depend on your personal circumstances and available budget.
Income protection comes with flexible terms and conditions which can be chosen to best meet your needs.
When securing cover, it's important to be aware of these key policy features:
Key Policy Terms for Contractor Income Protection
Talking your options through with an expert can assist you discover the best policy to meet your needs for the most affordable price.
For example, if you’re self-employed, opting for a shorter deferred period could allow you to start receiving payments quickly - reducing the amount of time you would need to rely on your own funds.
You could also opt for a long-term payment period to ensure you’re covered for the rest of your working life. Should your incapacity meant you were unable to return to work, you could receive payments up until retirement age.
Not only can the team at LifePro compare prices from the whole of the market, but they can also recommend what’s best for you based on your personal circumstances.
Get in touch for your free quotes today.
Frequently Asked Questions
Can contractors get income protection?
Yes, contractors can get income protection insurance despite not receiving sick pay. Contractors need it more than employees because: No employer sick pay safety net, Income stops immediately if unable to work, Must rely on savings or ESA (£84.80/week), Business costs continue even when not working. Income protection pays up to 70% of income if unable to work due to illness/injury. You'll need to prove income via tax returns (SA302) or accountant's accounts.
How much does income protection cost for contractors?
Contractor income protection costs depend on: Income level, Age, Health/smoking status, Deferred period, Benefit period. Example costs: 35-year-old contractor, £40,000 income, 26-week deferred period: £32-45/month for £2,333/month benefit (70% of income). Contractors may pay slightly more than employees due to: Income fluctuations, Tax complexity, Self-employed risk assessment. Compare quotes from LifePro to find best value.
How do I prove income as a contractor?
Insurers require proof of contractor income via: SA302 tax return (from HMRC), Accountant's letter/accounts, Company accounts (if limited company), Bank statements (last 3-6 months). Important: Insurers usually base cover on average income over last 1-2 years. If income fluctuates, they may use average or lowest year. Maintain good records to prove income. Most insurers need 12-24 months trading history.
What deferred period should contractors choose?
Deferred period is how long you wait before payments start. Options: 4 weeks, 8 weeks, 13 weeks, 26 weeks, 52 weeks. Contractors should consider: Emergency savings (how long can you survive without income?), Cost reduction (longer deferred period = cheaper premiums), Contract notice periods. Recommendation: If you have 3-6 months savings: Choose 13-26 week deferred period (saves 30-50% on premiums). If minimal savings: Choose 4-8 week deferred period (higher cost but faster protection).
Does income protection cover gaps between contracts?
No, income protection only covers inability to work due to illness or injury, not: Gaps between contracts (unemployment), Contract not being renewed, Choosing to take time off, Business downturn. You must be medically unable to perform your occupation. If you're fit and able but between contracts, income protection won't pay out. Some insurers offer unemployment cover add-ons, but these are rare and expensive.
Can I get income protection through my limited company?
Yes, contractors can get income protection either: Personally: You own the policy, pay premiums from personal funds, receive tax-free payouts. Through limited company: Company owns policy, premiums are business expense (tax deductible), payouts to company (taxable as income). Most contractors prefer personal policies because: Simpler administration, Tax-free payouts, Policy stays with you if company closes. Consult accountant for tax advice on best approach.
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