Income protection for contractors

Yes, contractors could secure income protection to protect their earnings against sickness and injury.

As contracting can cover a wide range of industries (IT, engineering, project management, design, construction etc), you’ll be asked questions about your occupation during the application process so insurers can find out more about your line of work.

Being a contractor could affect the price you pay for cover depending on what industry you work in.

For example, an IT contractor is likely to pay less than a contractor who works in construction. A construction worker could be seen as a greater risk due to the hazards of being on site.

It may still be possible to secure income protection depending on your line of work.

Reassured can find you the best quotes for contractors from leading UK insurers and smaller specialists.

Income protection can be beneficial for anyone with financial commitments, but particularly those who don’t benefit from employer sick pay.

While the government offers ESA, how much you’re eligible for is affected by factors such as what stage your assessment is at, your age and whether you’ll be able to go back to work.

The standard ‘assessment rate’ (paid for 13 weeks) is up to £71.70 per week if you’re under 25 or up to £90.50 per week if you’re aged 25 or over.

You’ll be then placed into either the work-related activity group (if you’re able to get back into work) which could pay out up to £90.50 per week, or the support group (if you’re unable to return to work) which could pay out up to £138.20 per week^[1].

Would this be enough to help you cover your living costs?

While personal savings could help to keep you afloat it would be a shame to dip into these funds if you had intended them for something else.

The experts at Reassured can provide you with all the information you need and give recommendations on what’s right for you.

Why not use our handy income protection insurance calculator below to work out how much cover you may need to help protect your essential costs?

The vast majority of contractors are self-employed, meaning it’s particularly important to have the right cover in place to protect your self-employed earnings.

For self-employed contractors, having to take time off due to illness or injury could result in a devastating loss of income - particularly if your incapacity meant you were unable to work for a prolonged period.

Many may even consider returning to work before a full recovery has been made to avoid the loss of any more earnings.

Recent research from Scottish Widows shows that 24% of self-employed workers only have enough money to cover costs for three months if they were unable to work^[2].

Income protection can be a huge benefit to self-employed contractors as the monthly payments can help you to keep up with essential financial commitments - allowing you to take the time off that you need.

If you’re self-employed and have your business set up as a limited company, you also have the option of an executive income protection policy.

This is a policy that will be set up and paid for by your business, allowing you to cover the income of an employee (this could be any employee, including yourself).

Yes, once cover is in place, your occupation won’t impact whether your policy will pay out to you.

Your illness/injury simply must meet the definition of incapacity listed within your policy and you must be incapacitated for longer than your deferred period for your policy to pay out.

[1] https://www.gov.uk/employment-support-allowance/what-youll-get

[2] https://ifamagazine.com/self-employed-people-risk-financial-hardship-as-over-half-rely-on-personal-savings-when-out-of-the-office-scottish-widows-research-reveals/

[3] https://www.sunlife.co.uk/siteassets/documents/cost-of-dying/sunlife-cost-of-dying-report-2024.pdf/