You don’t always have to choose between life insurance vs…
Yes, it’s possible for contractors to take out an income protection policy.
As a contractor it’s unlikely that you’ll benefit from having sick pay during periods of ill health or injury.
The thought of not being able to earn an income can be a scary prospect for anyone, but especially those that don’t have access to any sources of financial support.
Although you may be eligible for government disability or sickness benefits, this amount is unlikely to be enough to cover all key expenses.
This is where income protection insurance for contractors can be particularly beneficial, as payments can mimic a monthly income to help you keep up with living costs while you’re unable to work.
Why not compare income protection quotes using the services of Reassured Advice? By using their whole of market comparison you can find the best policy to meet your needs at the most affordable price.
Quotes are fee-free, personalised and without obligation. The best part is quotes through Reassured Advice start from just 20p-a-day ‡
Keep reading this comprehensive contractor income protection guide to find out everything you need to know…
Contractor income protection is simply an income protection insurance policy taken out by a contractor.
Income protection is designed to pay out a percentage of your income, in monthly payments, while you’re unable to work due to sickness or injury.
There are typically two options available for contractors:
While executive income protection has the benefit of being tax deductible, if you leave the company or the company goes bust, you’ll no longer benefit from this protection as the premiums are paid for by the company and the policy will be taken out under the company’s name.
With a personal income protection policy, your cover will remain in place until the policy term comes to an end.
Executive income protection isn’t something that’s currently offered by Reassured Advice but a friendly member of the team can help you to compare personal income protection quotes free of charge.
As contractors don’t benefit from the financial safety net of sick pay while they’re unable to work, it can be wise to have other forms of protection in place - such as income protection.
Talking to an expert can help you to establish whether income protection is right to meet your needs.
Why not speak to Reassured Advice? A friendly member of the team can provide you with all the information you need and help you to compare quotes to find the best available deal.
The vast majority of contractors are self-employed, meaning it’s particularly important to have financial protection in place to protect your self-employed income.
Despite this, research from top UK insurer The Exeter shows that less than 1 in 10 self-employed workers protect their income with insurance.
With 31% of self-employed workers having less than £2,000 in savings to fall back on.
For a self-employed worker, being unable to work due to illness or injury could result in a devastating loss of money.
Income protection can be a huge benefit to self-employed contractors as monthly payments can help to keep you afloat financially until you’re able to return to work.
If taking out a long-term income protection policy, you could even receive payments until you reach retirement (if you’re unable to work again), meaning you’re covered for your whole working life.
Why not compare quotes for self-employed income protection using the services of Reassured Advice?
We have a full income protection for self-employed guide which you may find useful »
The best income protection to meet the needs of contractors will depend on a variety of factors.
One of the main factors will be your employment status, as this will dictate what options are available to you.
A personal income protection policy will be available to all contractors, whether you own a limited company, are a sole trader, work for an umbrella company or for an agency.
However, if you're the owner of a limited company, you will also have the option of an executive income protection policy.
Keep reading as we explore these policies in more detail…
There are two policy options available to contractors who are taking out an income protection policy.
Which is best for you will depend on your personal circumstances.
Contractor income protection policies include:
When setting up an income protection policy, there are a few policy terms and conditions that you should be aware of. It’s important to choose wisely to ensure your policy meets your needs.
|Policy term||The policy term refers to how long you’ll be covered for. How long your policy should be will depend on your personal needs and circumstances. As a contractor you may wish to choose the maximum term length possible to ensure you’re the most comprehensively covered. There is usually an upper age limit by which your policy must end by (this can vary between providers).|
|Benefit amount||In terms of income protection, a ‘benefit amount’ refers to how much will be paid out to you. Typically, a standard income protection policy will pay out between 50% and 70% of your usual income in monthly payments. So the exact amount paid out to you will depend on your income.|
|Payment period||This refers to how long you’ll receive income protection payments for. You can choose between short term (which will pay out to you for a maximum of 1 - 2 years) or long term (which can pay out to you until you reach retirement).|
|Deferred period||The deferred period is the length of time you must be unable to work in order for your payments to commence. Commonly deferred periods can be as short as 4 weeks and as long as 52 weeks. Some providers will offer a ‘day 1’ deferred period which means you’ll be able to receive payments after just a few days of being unable to work. Your payments will only commence if you’re still unable to work after your deferred period has ended.|
|Definition of incapacity||This refers to what qualifies you to start claiming your income protection payments. Common definitions include:|
|Premium type||This refers to how you’ll pay for your cover. common premium types include:|
Reassured Advice can help you to compare personal income protection quotes from the whole of the market, allowing you to find the right policy at the best price. Simply get in touch.
The exact price you’ll pay for income protection will depend on a variety of factors. This includes both information about you and your chosen policy.
Key information required to calculate your premium includes:
Policy details which influence the price you pay:
It’s essential to compare quotes to make sure you’re taking out a policy that meets your needs at the most affordable price.
The table below shows pricing examples for a personal life insurance plan for a contractor.
The quotes are based on a non-smoker who is in good health, with an annual income of £40,000. Cover is up to age 65 with a 3 month deferred period and with a maximum benefit amount (£2,000 per month):
|Age||Price per month|
Contact Reassured Advice for your personalised, fee-free and no-obligation quotes.
Taking out a personal income protection policy won’t be classed a business expense.
However, if you're the owner of a limited company you have the option of taking out an executive income protection policy.
This is an income protection policy that will be taken out under your company’s name and the premiums will be paid for by the company, meaning they can be classed as a business expense (making them tax deductible).
Executive income protection isn’t something that is currently offered by Reassured Advice.
There are some other policy types that contractors may want to consider:
Reassured can help you to compare life insurance with critical illness cover from some of the UK’s leading providers.
Life insurance with critical illness cover starts from just £10 a month through Reassured º
While Reassured Advice can’t currently help you to compare executive life insurance policies (for those with limited companies), a friendly member of the team can help you to compare personal plans.
Reassured Advice can help you to compare quotes from the whole of the market (from top UK providers to smaller specialists) and provide you with the best policy options for contractors.
This way you can secure a policy that meets all of your needs, at the most affordable price.
Protect your income from just 20p-a-day through Reassured Advice and have peace of mind that you’ll have financial support while you’re unable to work due to sickness and injury.
Quotes through Reassured Advice are fee free and completely without obligation, so why not get your journey started today?
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