Life insurance for self-employed people is mostly the same personal cover everyone else can buy, with one thing missing and one thing added. What is missing is an employer's scheme; what is added is the job of showing an insurer what you earn. The choice then comes down to a personal term policy, a policy through a limited company, or both.

To have someone go through your own set-up and say which of these routes is open, send the enquiry form here. An FCA-authorised broker will phone you back, and there is no charge.

What is different about life insurance when you are self-employed?

On GOV.UK's description, a self-employed person runs their business for themselves, is not paid through PAYE and lacks an employee's employment rights; its checklist adds that they "do not get holiday or sick pay when they’re not working".

MoneyHelper's guide to protection (archived capture, 8 September 2025) suggests working out what protection you already have, and gives "a benefits package that includes a form of life insurance" as something an employed person might have. A sole trader has no employer to offer that kind of package, so any life cover is usually one they arrange and pay for themselves. Group cover of that kind, and whether anything similar exists for the self-employed, is covered in death in service for the self-employed.

The guide's own example is a self-employed parent who might choose income protection and also want life insurance "to make sure your dependants are taken care of when you die". Income protection pays while you are alive but cannot work, and has its own page: income protection for the self-employed.

Which life insurance options are open to a self-employed person?

Personal term life insurance does not depend on how you are paid. LV='s consumer page (read October 2026) describes the two main shapes. With level cover, the amount and the premiums are "fixed for the term of the policy"; decreasing cover reduces each year and is designed to "cover reducing amounts" owed on capital and interest repayment mortgages. Its life cover "has no cash-in or surrender value": if you stop paying, the cover ends.

Other personal options exist alongside these.

Which of these fits depends on a household's debts, dependants and term. How much life cover you need explains how the amount is worked out.

Sole trader or limited company: which routes are open?

GOV.UK's guide to business structures says "most businesses register as a sole trader or limited company". For a sole trader it notes "you are personally responsible for all of the debts of the business". A limited company, by contrast, is "legally separate from the people who own it, and is run by one or more directors". That legal split decides one product in particular.

Relevant life insurance is a policy a company takes out and pays for on an employee's life. Aviva's key features (EDCO1771, January 2026) say a sole trader, as business owner, an equity partner or an LLP member is not an employee and so cannot be covered, while an employee can include a single director of a limited company on PAYE. For a sole trader, then, relevant life is not a route; for a director of their own company it can be one. The mechanics are in what relevant life insurance is, and the insurers that offer it in relevant life insurance providers.

A business can also insure itself against losing someone. That is key person cover, which pays the business and not your family; what key person insurance is for explains it, and key person insurance for a sole trader looks at whether it applies without a company. Moving from sole trader to company is a business decision with tax, accounting and liability effects, so cover is better treated as a reason to ask your accountant a question than a reason to incorporate.

What do insurers ask a self-employed applicant to show?

The clearest answers are on insurers' pages written for financial advisers, not for the public. Three of them, read in October 2026, show the kind of thing asked.

  • Royal London (adviser site) says it will "ask your client for additional financial information in certain circumstances", depending on the amount of cover, and lists as typical corroboration for family protection "evidence of income from employer or accountant (P60 or equivalent)".
  • Vitality (adviser site) takes "any existing cover" into account and says that even where it has no automatic requirements it may still ask for more. At higher amounts it wants a financial questionnaire "with an independent third party signature or supporting evidence (e.g. proof of income, loan letters, schedule of assets)", and for a new company or one making a loss may ask for evidence "such as a business plan with projections or reports and accounts".
  • Scottish Widows (adviser FAQ) treats a self-employed client's earnings for personal cover as "taxable income – in other words earnings after costs and before tax"; for business cover, where income varies or the client is self-employed, advisers "should use an average over the last 2-3 years".

These are three insurers' rules for advisers, not a market standard, and others may ask for something different.

If your profit has changed a lot from year to year, or you have only recently started trading, it may be worth asking a broker how insurers would treat your accounts before any application goes in. The form on this page will put you in touch with one at no charge.

Can you claim life insurance premiums against tax?

Not for personal cover, as HMRC describes the rules. Its Insurance Policyholder Taxation Manual (page dated 9 February 2022) says that from 6 April 2015 tax relief for payments for life insurance is limited to an individual's payments to a trade union or police organisation where part of the payment is attributable to superannuation, life insurance or pension benefits. For sole traders, its Business Income Manual (April 2016) says a sole trader or partner cannot deduct premiums for life, accident or sickness cover on themselves or a partner when working out trading profits. The full position, including cover bought through a company, is in life insurance tax relief. The specific question of a business expense is in whether a self-employed person can claim life insurance premiums, and income protection premiums, which are treated separately, in income protection and tax. This is the general position, not tax advice, and tax rules can change; an accountant can say how it applies to your accounts.

How do you choose between the options?

A few questions separate the routes more than any product feature.

  • How do you trade? A sole trader or partner is limited to personal cover. A director paid through PAYE by their own company can also ask about relevant life.
  • Who needs the money? Cover that pays your family is personal cover or relevant life. Cover that pays a business or a co-owner is a business protection policy.
  • What is the money for? A debt that shrinks over time sits naturally with decreasing cover; income your household would miss for years sits with level cover. Both are explained above.
  • Can you show your income? Have your latest tax return, accounts or accountant's figures to hand.
  • Where should the payout go? A trust can send it to the people you name rather than into your estate; putting a life insurance policy in trust explains how.

The wider question of whether you need life cover at all is covered in the who needs cover guides.

Frequently asked questions

Can you get life insurance if you are self-employed?

Yes, personal term life insurance is not tied to being employed. Insurers' adviser pages describe the evidence they ask for from self-employed applicants, and the section above summarises it.

What term life insurance is available to self-employed people?

The same as anyone else: level cover and decreasing cover, single or joint. LV= describes both on its consumer page, and the choice depends on what the cover is for.

Is there life insurance for freelancers and contractors?

Freelancers and contractors who trade as sole traders can buy personal cover. If a contractor works through their own limited company and is paid through PAYE, relevant life becomes a question to ask about too.

Is there life insurance for small business owners?

There are two kinds. Cover for your family is personal cover or, for a company director, relevant life. Cover that pays the business is key person or shareholder protection, which has its own pages.

How much is life insurance for the self-employed?

It depends on your age, health, smoking status, the amount and the term, so a figure without those would mean little. A broker can obtain actual quotes once they know your details, and the enquiry form here introduces you to one at no cost.

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