No employer cover? Build your own.
The short answer
Self-employed people usually have no employer death-in-service cover, so a personal term policy replaces it. Base the amount on average earnings over several years rather than your best year, include debts you have personally guaranteed, and write the policy in trust. Company directors may also consider a relevant life policy.
Who this cover may suit
- You are a sole trader, freelancer, contractor or partner.
- Your family relies on income from your business.
- You have personally guaranteed a business loan or lease.
- You have no employer scheme to fall back on.
When to consider another option
- You run a limited company and want the company to pay — see relevant life policy.
- You need to protect the business itself from losing a key person — that is business protection, which is separate.
- You mostly need a monthly income — see family income benefit.
How it works
Tell us about you
A few simple questions about your age, health and what you want to protect.
Choose amount and term
Pick how much cover you want, its shape and how long it should last.
Review real options
See options based on your answers, with a real person to help if you want one.
What you are missing without an employer
MoneyHelper notes that employees often get life insurance through work, usually a multiple of salary. [7] Self-employed people generally have none, so a personal policy has to do that job. MoneyHelper also explains the main types of cover. [2]
| Typical employee | Self-employed | |
|---|---|---|
| Death-in-service | Often 2–4× salary | None |
| Income evidence | Payslips | Tax returns or accounts |
| Business debts | Rarely relevant | May be personally guaranteed |
| Company-paid option | Group scheme | Relevant life policy (directors) |
Sizing cover on variable income
Use an average of your last two or three years’ profits rather than your best year, and be ready to show tax returns if asked. Include any business loans you have personally guaranteed. Our self-employed guide walks through the figures, and our cover needs guide explains the formula.
A sole trader with a family
Fictional example: Priya, 38, runs a bakery as a sole trader with average profits of £36,000, a £160,000 mortgage and a £20,000 personally guaranteed loan. No prices are shown.
- Mortgage
- Decreasing cover over 22 years
- Income
- Level cover based on average profits
- Guaranteed loan
- Included in the level amount
- Trust
- Written in trust for her partner and child
Her family could clear the home and the loan, with income replaced for several years. See our trusts guide.
Tax and directors
A personal policy in trust may sit outside your estate for Inheritance Tax. [4] HMRC explains how trusts are taxed. [5] Directors can consider a relevant life policy, paid by the company under specific rules. [11]
Self-employed cover at a glance
What works well
- Replaces the cover employees get through work.
- Stays with you whatever the business does.
- Can include personally guaranteed debts.
What to watch
- Insurers may ask for proof of income.
- Using your best year could overstate needs.
- Review when profits or debts change.
The FCA’s market study into pure protection found that competition generally works well, while noting many households remain underinsured. [3] Answer every application question accurately: under the Consumer Insurance (Disclosure and Representations) Act 2012 you must take reasonable care not to misrepresent. [6]
Employer death-in-service cover is valuable, but MoneyHelper notes it usually ends when you leave the job. [7] If a claim is ever disputed, the Financial Ombudsman Service handles complaints about insurers free of charge. [8]
Keep exploring
- Life insurance for the self-employed: protecting income without an employer
- How much life cover might I need?
- Writing life insurance in trust: how it works in the UK
- Life insurance medical questions and underwriting explained
- Relevant life policy
- Term life insurance
- Family income benefit
- Level term life insurance
Frequently asked questions
Can self-employed people get life insurance?
Yes. Term life insurance is available to self-employed people on broadly the same basis as employees. Insurers mainly consider your age, health, lifestyle, the amount of cover and the term. For larger amounts, they may ask about your income to check the cover is in proportion to what your family would lose, and could ask for tax returns or accounts. Being self-employed does not usually make cover harder to get, although some higher-risk occupations may affect the terms an insurer offers you.
How much life insurance do self-employed people need?
Start with the same building blocks as anyone else: your mortgage or rent, the income your family would lose, childcare and one-off costs. The difference is that your income may vary. Many people use an average of the last two or three years of profits rather than a single strong year. Add any business borrowing you have personally guaranteed, because that debt could pass to your estate. Subtract savings and existing cover. The estimator on this page shows the calculation openly so you can test different figures.
Do I need to prove my income for life insurance?
For most personal term policies, insurers ask about your income on the application and only request evidence for larger amounts of cover or where the figure looks high compared with your earnings. If they do ask, self-employed people usually provide tax returns, tax calculations or accounts. Answer every question accurately: the Consumer Insurance (Disclosure and Representations) Act 2012 requires you to take reasonable care not to misrepresent, and accurate answers help make sure a future claim is paid without problems or delays.
What is a relevant life policy?
A relevant life policy is a type of death-in-service cover that a limited company can buy for an individual director or employee. The company pays the premiums and the payout goes to the person’s family, usually through a trust. It can be a tax-efficient alternative to a personal policy because premiums are not normally treated as a benefit in kind, subject to conditions. It is not available to sole traders or partnerships. Our relevant life policy page explains who can use it and how it works.
Can I put business debts into my life insurance?
Yes, if you have personally guaranteed a business loan, lease or overdraft, it makes sense to include it when working out your cover, because the lender could claim against your estate if you die. Some people include the debt in a single personal policy; others take separate cover that matches the loan term. If the business itself would suffer from losing you, such as a partner or key person, business protection is a separate area to consider alongside your personal family cover.
Should my self-employed life insurance be in trust?
Writing a personal policy in trust is often sensible. It lets you choose who receives the payout and can mean they receive the money without waiting for probate, which matters when business affairs may take time to sort out. It may also keep the payout outside your estate for Inheritance Tax, which is usually charged above £325,000. Most insurers provide trust forms free of charge. HMRC and GOV.UK explain how trusts are taxed, and our trusts guide covers the main choices in plain English.
Sources
- Association of British Insurers — Protection insurers pay out £7.84 billion in claims in 2025 (2026-06-29)
- MoneyHelper — What is life insurance? (2026-09-28)
- Financial Conduct Authority — MS24/1.5 Market Study into the Distribution of Pure Protection Insurance Products: Final Report (2026-09-21)
- GOV.UK — How Inheritance Tax works: thresholds, rules and allowances (2026-09-28)
- HM Revenue & Customs — Trusts and Inheritance Tax (2010-11-08)
- legislation.gov.uk — Consumer Insurance (Disclosure and Representations) Act 2012 (2012-03-08)
- MoneyHelper — Life insurance through work (2026-09-28)
- Financial Ombudsman Service — Complain about a financial business (2026-09-28)
- Office for National Statistics — Inflation and price indices (2026-09-17)
- GOV.UK — Bereavement Support Payment (2026-09-28)
- legislation.gov.uk — Income Tax (Earnings and Pensions) Act 2003 (2003-04-10)
- GOV.UK — Funeral Expenses Payment (2026-09-28)
- NHS — Cancer (2026-09-28)
- GOV.UK — Trusts and taxes (2026-09-28)