Self-employed
For self-employed people, it is important to differentiate between personal cover and business cover.
To calculate the maximum possible personal cover, we recommend using their average income from the past 3 years. This means the applicant’s share of net profit plus any potential salary or management fee.
The full profit share attributable to the applicant should be considered, even if they decide to retain parts of the profit within the company. This is often done for tax reasons and the applicant can distribute the retained profit at any time in the future. In return, only the profit earned within the relevant year should be considered and not profit which was generated in previous years and is only now distributed.
Additional sources of earned income can be allowances, bonuses, commissions, etc. They can be (partially) credited if they are regular, stable, and attributable to their occupation. What percentage of these additional income sources can be used depends very much on the details of the specific case.
If a person is a major shareholder (self-employed) and managing director (employee receiving a salary) we recommend looking at their profit share as well as their salary. As the applicant can most likely set their own salary, a salary confirmation alone is not significant.
With regards to business cover, the calculation depends almost entirely on the insurable interest.
Financial evidence: For self-employed people, obtaining financial statements confirmed by an independent third party and income tax returns is recommendable.