As a Self-Employed Mum, How Could Serious Illness Cover Help Protect Your Family’s Finances?

For many self-employed mums in the UK, life can be a rewarding balancing act. You might be the CEO of your own business, a creative freelancer shaping your own workdays, and the Chief Everything Officer at home. This path often brings flexibility and freedom, but it can also mean navigating a different set of financial considerations, especially as there isn’t usually an employer safety net to fall back on.

If you’ve ever thought about what might happen to your family’s finances if you were to become seriously ill and unable to work, you are not alone. It can be a common concern. This is where looking into financial protection products could be a consideration. One of these products is Serious Illness Cover. At Polly, we believe in providing clear information to help you understand the choices you can make for your family’s financial future.

In short: Serious Illness Cover is a type of insurance policy designed to pay out a tax-free, lump sum of money if you are diagnosed with one of the specific medical conditions covered by the policy during its term. The aim of the policy is to provide a financial cushion that could help you and your family manage financially, allowing you to focus on your health and recovery.

The Unique Financial Picture for Self-Employed Mums

When you work for yourself, the financial landscape can look quite different from that of someone in traditional employment. Understanding these differences can help to highlight areas where you might want to consider putting your own protections in place.

• No Employer Sick Pay: Perhaps the most significant difference is the absence of statutory or contractual sick pay. If you’re unable to work due to illness, your income can often stop immediately. There is typically no HR department to call or employer-funded scheme to rely on.
• Income is Directly Linked to Your Work: For most freelancers and business owners, if you don’t work, you don’t earn. A serious illness could mean a significant period without any income, which can place a strain on household finances.
• Business and Family are Intertwined: While juggling work and family life is a reality for most working parents, for self-employed mums, the lines can be even more blurred. The income you generate may be the primary source of funding for your family’s needs, from the weekly food shop to the mortgage.

What Exactly is Serious Illness Cover?

It can be easy to get different types of insurance confused, so it helps to be clear on what Serious Illness Cover is and what it is designed to do.

Serious Illness Cover, which is sometimes also referred to as ‘critical illness cover’, is an insurance policy. The purpose of the policy is to pay out a one-off, tax-free cash sum if you are diagnosed with a specific serious illness that is listed in your policy documents.

It is different from life insurance, which is designed to pay out upon death. It is also different from income protection, which is typically designed to pay a regular monthly amount if you are unable to work due to illness or injury. Serious Illness Cover is about providing a single lump sum at a time when you and your family might need it most.

How Could a Payout from Serious Illness Cover Help You?

Receiving a lump sum payment following the diagnosis of a serious illness could open up a range of options and help to relieve financial pressure. It’s a personal policy intended to support your personal and family finances, giving you the flexibility to use the money in a way that best suits your family’s needs.

Here are some of the ways a payout could be used:

• Help Replace Lost Income: The money could act as a substitute for the income you are unable to earn while you recover, helping to keep your household on a stable financial footing.
• Cover Everyday Bills: It could be used to help ensure essential outgoings like your mortgage or rent payments, council tax, energy bills, and food costs are covered.
• Pay for Additional Childcare: If you’re not well enough to look after your children, you might need to arrange extra childcare. A payout could help to cover these unexpected costs.
• Manage Health-Related Costs: The funds could be used to help with costs associated with treatment or recovery that may not be covered by the NHS, or for things like travel to hospital appointments.
• Adapt Your Home: In some cases, a serious illness may require you to make adaptations to your home, and the cash sum could help to fund these changes.

Ultimately, the aim is to give you financial breathing space. By helping to take care of some of the financial worries, it can allow you to put your energy and focus where it matters most: on your health and your family.

What Kinds of Illnesses are Typically Covered?

The specific illnesses covered can vary between different insurance providers and policies. However, they typically include serious conditions such as some types of cancer, heart attacks, and strokes.

It is very important to read the policy documents carefully before taking out any cover. These documents will provide you with a full and definitive list of all the conditions that are covered, along with any exclusions or limitations. This helps you to make a fully informed decision.

A Note on Joint Policies

You may have heard of ‘joint’ life insurance policies, where two people are covered under a single policy. It is worth noting that a joint policy typically only pays out once, usually on the first claim, after which the policy ends. This would leave the surviving partner without cover. For these reasons, we do not offer joint policies as we want all policyholders to benefit from a policy payout to their loved ones. Polly’s Serious Illness Cover is taken out on an individual basis.

Taking the Next Step

Thinking about financial protection can feel like a big topic, but breaking it down into manageable steps can help. Understanding what products are available and how they might relate to your specific circumstances as a self-employed mum is a positive first step.

If you feel that Serious Illness Cover could be a suitable option for your family’s financial plan, you might want to find out more. Getting a quote is often a straightforward process and does not commit you to anything. It can simply provide you with the information you need to consider your options.

TL;DR: Serious Illness Cover for Self-Employed Mums

• The Challenge: As a self-employed mum, you likely don’t have employer sick pay. If you can’t work due to a serious illness, your income could stop.
• What it is: Serious Illness Cover is a policy designed to pay a tax-free, one-off lump sum if you’re diagnosed with a specified condition covered by the policy.
• How it Could Help: The payout is flexible. It could be used to help replace lost income, cover your mortgage and bills, or pay for extra childcare, allowing you to focus on getting better.
• Personal Cover: This is a personal policy designed to protect your family’s finances, not cover business debts.
• Check the Details: Always read the policy documents to see the full list of illnesses covered and any exclusions.
• Next Steps: Considering your financial protection options can be a proactive step towards securing your family’s financial wellbeing.