Can Contractors Get Income Protection?

Yes, contractors can get income protection insurance whether operating through a limited company, umbrella company, or as a sole trader. Income is assessed based on contracts, company accounts, dividends, and tax returns. Most insurers require 2-3 years of trading history. Cover typically replaces 50-70% of gross income.

Self-employed income protection

Learn more about self-employed income protection in our detailed guide.

Learn more about income protection in our detailed guide.

Income protection with redundancy

Learn more about income protection with redundancy in our detailed guide.

Critical illness vs income protection

Learn more about critical illness vs income protection in our detailed guide.

Can contractors get income protection?

Yes, contractors can get income protection whether working through a limited company, umbrella company, or as a sole trader. Insurers assess your income based on contracts, accounts, and tax returns.

How do contractors prove income for income protection?

Contractors can prove income via limited company accounts/dividends, umbrella company payslips, SA302 tax calculations, or contract agreements. Insurers typically want 2-3 years of trading history.

Does IR35 affect income protection?

IR35 status can affect how your income is assessed. Inside IR35, income is treated like employment (PAYE). Outside IR35, dividends and salary are considered. Either way, you can still get cover.

What if I'm between contracts?

Income protection covers illness/injury, not gaps between contracts. However, if you become ill during a contract, cover continues even if the contract ends. Some policies have 'own occupation' definitions.

Can I pay premiums through my limited company?

Premiums paid by your company may be treated as a benefit in kind or not allowable for corporation tax. Personal premiums aren't tax-deductible but payouts are tax-free. Consult an accountant.

How much cover can contractors get?

Typically 50-70% of gross income. For limited company contractors, this is usually based on salary plus dividends averaged over 2-3 years. Some insurers also consider retained profits.

Quick Answer

Income Protection for Contractors

Last reviewed: December 2025

Reviewed by Jay Sabine – CeMAP Qualified – 29 years experience

Contractors can get income protection via limited company, umbrella, or sole trader. 50-70% income covered. Prove income via accounts, dividends, contracts. 2-3 years history usually needed.

As a contractor, you're unlikely to have statutory sick pay or employer benefits to fall back on. Income protection provides a regular monthly payment if illness or injury prevents you from working, giving you financial security to focus on recovery rather than finding the next contract.

Cover is subject to policy terms. Pre-existing conditions may be excluded.

Key Points

1Available for limited company, umbrella, sole traders
2Cover 50-70% of gross income
3Proof via accounts, dividends, SA302
4IR35 status affects income calculation
52-3 years trading history typical requirement
6Covers illness/injury, not contract gaps

Eligibility Criteria

Minimum trading history (usually 2-3 years)
Income evidenced by accounts/tax returns
Current active contract or recent history
Occupation must be insurable
Health declaration required

Typical Timeframe

Applications take 1-4 weeks. Claims pay after your chosen waiting period (typically 4-13 weeks for contractors who have some savings buffer).

Next Steps

1Gather company accounts or tax returns
2Calculate average income over 2-3 years
3Consider appropriate waiting period
4Check IR35 implications with accountant
5Compare quotes from contractor specialists

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Income Protection for Contractors

Key Points

Eligibility Criteria

Typical Timeframe

Next Steps

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