This page covers insurance against being unable to work and related issues – if you are interested in General Insurance then see our Separate Guide.
Insurance against being unable to work is a concern for many Yoga teachers, as is protecting your family if you are ill or die prematurely.
Insurance for these risks is available, albeit at a price. You will need to shop around various insurers or get some help from a Financial Advisor.
The Main Policy Types Are:
- Sickness, Injury and Personal Accident – designed to cover short term periods of being able to work – there is likely to be a limit on how long these cover you for, eg two years
- Permanent Health Insurance – designed to give you cover for serious illnesses over a longer term (sometimes called Income Protection) – normally these pay out until retirement
- Critical Illness insurance – pays a lump sum if you are diagnosed with a serious condition
- Life Assurance – pays a lump sum on your death
A Strategy Whilst You Are Working
Cover of this nature can be expensive, and in most cases is not an allowable business expense.
You may choose to “Self Insure” – use savings, or have an arrangement with a cover teacher. This may be a good short term strategy, but possibly not so safe long term. A way of reducing costs is to limit the period of claim or have a longer deferral period.
- Period of claim – a policy that lasts for 12 or 24 months will be a lot cheaper than one that covers a severe disablement for many years until normal retirement age
- Deferment – a policy that defers a claim for 8 or 12 weeks will be cheaper than one that pays out after 1 or 2 weeks
One practical approach to structuring things could be to:
- Self insure for 4 weeks – have savings to cover you
- Have a two year Personal Accident/Sickness policy which starts at 4 weeks with enough benefits to cover engaging cover teachers, keeping up rent on studio / teaching space, paying your mortgage
- Have a long term Permanent Health policy which starts at 3, 6 or 12 months and covers you to retirement, with lower benefits, to replace your profits if you can’t work long term
It can be useful to visit some of the Money Comparison Websites, put your details in, and see whats offered.
Planning for sickness and protection is very dependant on personal circumstances – there is no “one size fits all” as family, wealth and lifestyle all have an effect. Its an area where it is best to take some advice, and think through the differing scenarios – the needs of a studio owner with high rent will be different to someone running one class a week alongside another job or a partners income. Likewise you may need less cover later in life when families have left home and mortgages are paid off.
Mortgage Protection
It may be a requirement of your mortgage to have insurance, and there are often hybrid Income Protection, Critical Illness and Life Assurance policies. These are normally “decreasing term” which means they are tailored to run the length of your mortgage and the lump sum element reduces as your loan is paid off.
These are great for protecting your investment in a home, but may not protect the rest of your lifestyle, so need to be looked as a solution for a specific risk.
Tax Deductibility
Generally policies of this nature are not tax deductible. However to match this, claims are not taxable. HMRC Guidance
Slightly different rules would apply with limited companies and directors where in some limited circumstances the costs may be deductible.
State Benefits if You Cannot Work
If you have been paying National Insurance then its likely that you can claim Employment and Support Allowance
Otherwise Universal Credit may be available.
Further Advice
Its a good idea to think through the risks you need to protect, and then take advice from a Financial Advisor specialising in the area. It may be that a comprehensive solution is prohibitively expensive, so you will need prioritise the main risks, and have loose strategies for elements it is too prohibitive to insure.
We are not Financial Advisers and don’t sell policies. We will happily talk with you about the options and strategies.
