Contractor life insurance UK

As of 2023, it’s estimated that there are 94,545 contractors working in just the construction sector alone[1].

With this in mind, most insurers are used to providing life cover to UK contractors.

Whether you’re a contractor in construction, IT, engineering, project management or design, there’s a life insurance policy to meet your needs.

At Reassured we can help you compare quotes from some of the UK’s best life insurance providers to find suitable quotes for contractors.

We can also provide you with all the information you need, helping you make an informed decision.

So, why not use our award-winning broker service to conduct a life insurance comparison? Simply get in touch to get started today.

What is contractor life insurance?

Contractor life insurance is simply a life insurance policy taken out by a contractor. There’s no specific life insurance policy designed for contractors.

Contractor life insurance can refer to one of the following:

  • A standard life insurance policy - This a personal policy taken out by an individual. This will typically be taken out by contractors who don’t own a limited company (such as sole traders)
  • A relevant life insurance policy - A policy which can be secured by a limited company. This can allow contractors who own their own limited company to provide life cover to an employee (including directors)

Although we can’t currently arrange relevant life insurance here at Reassured, we can help you compare multiple personal life insurance policies (free of charge).

Do I need contractor life insurance?

Whether you need life insurance as a contractor will ultimately depend on your personal circumstances.

If you have dependents who rely on your income, securing some form of cover is likely to be beneficial to help protect their financial future.

The pay out from life insurance could help your loved ones to cover:

  • The mortgage (and remain in the family home)
  • Day-to-day family living costs (average family spending in the UK is £2,907 per month, that’s £34,886 per year[2])
  • The cost of your funeral (current average cost £3,953[3])
  • Outstanding debts (while it’s likely your loved ones won’t have to pay these back, any outstanding amount will be taken from your estate, life insurance can help to replace these funds)
  • Additional childcare costs (£285.31 is the current average cost of full-time nursery[4])

Those in employment often benefit from death in service, which will pay out to loved ones if the employee passes away while in service with their employer.

However, being self-employed means you won’t be eligible for benefits such as these.

Life insurance can allow you have your own personal cover to protect your loved ones, should the worst happen.

Alternatively, if you own a limited company with employees, a relevant life insurance policy could allow you to provide them with financial protection.

Particularly for contractors with occupations that could be considered as risky (such as those that work on site), having adequate protection is key in ensuring the financial future of your loved ones.

At Reassured, our expert team can talk through your needs and help you establish what’s right for you.

We have a full life insurance for self-employed guide if you require more information »

How much contractor life insurance do you need?

Work out how much life insurance you may need based on your current financial commitments and what you want your policy to cover. Simply fill in the fields which apply to you for an instant calculation.

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£137,934 is the estimated mortgage debt per household in the UK.

The purchase of a home is likely to be the largest financial commitment any of us will make in our lifetime. Your life insurance should cover your remaining mortgage balance to allow your loved ones to stay in the family home should anything happen to you.

Source: Moneynerd.co.uk

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The average monthly household budget in the UK is £2,548 (that’s £30,576 per year), which is spent on transport, food & drink, utilities (gas, electricity, water etc), clothing, council tax and leisure activities.

With energy prices hitting a record high and the cost of living rising sharply in the UK, you may wish to factor in utility bills and family living expenses into your cover.

Source: Nimblefins.co.uk

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The average personal debt of UK adults has risen to £34,566 (not including mortgage debt), with credit cards, personal loans and overdrafts being the most common forms of debt.

Factoring in any debts into your life insurance cover means that, if they need to be paid back from your estate after your passing, your loved ones won’t miss out financially.

Source: Money.co.uk

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According to SunLife, the average cost of a funeral in the UK is £3,953 (with the overall cost of dying at £9,200).

Funeral costs have increased by 116% since 2004 and are a significant cost which should be factored into the amount of life insurance you secure.

Source: SunLife.co.uk

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When factoring in cover for your children, you may wish to calculate the amount based on how long it is until they reach financial independence.

This could include childcare (£7,000 per year for part-time care), school expenses (£1,519 per school year for uniforms, lunches, stationary etc), as well as an additional sum for further education (this could be a contribution of up to £5,000 per year).

Sources: Daynurseries.co.uk, Primarytimes.co.uk & Savethestudent.org

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2 in 5 adults say they are relying on an inheritance to fund their retirement.

Factoring in an inheritance to your sum assured could allow loved ones to live a more financially comfortable life. Alternatively, you could leave a cash gift to a charity of your choosing.

Source: Moneyage.co.uk

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If you’re lucky enough to have your own savings or are part of the 30% of UK residents who already have a life insurance policy in place, this can provide financial protection for loved ones.

By entering your current cover, savings or death in service amount you can reduce the sum assured you require.

Source: Scottishbusinessnews.net

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What’s the best life insurance for contractors?

The best life insurance for contractors will depend on a variety of factors, including:

  • What you’d like to protect - Each policy type can be used to help protect different aspects of your life
  • Your employment status - Whether you’re the owner of a limited company or a sole trader can affect which options you can take out. For example, owners of limited companies can secure relevant life insurance through their company. Whereas a sole trader will need to secure a standard life insurance policy
  • Whether you require additional cover - Do you also want protection against illness? Some policies include additional cover, or allow you to add additional cover to your policy
  • Your budget - The price for cover can vary between policy types, with some being more affordable than others

It’s essential to be aware of all your options before securing a policy, this way you can ensure you’re getting the right policy to meet your needs.

Why not use our award-winning broker service to compare life insurance quotes? We can help contractors find a great deal.

What life insurance policies are there for contractors?

There are a range of life insurance policies available to contractors, the right one for you will depend on your occupation, what you’d like to cover and your budget.

The policy options available include:

Keep reading as we explore these policy options in more detail…

Level term life insurance for contractors

Level term life insurance for contractors
  • Provides cover for a specified period (for example, up to 40 years)
  • Pay out will be made if you pass away during this time
  • The pay out remains level (the same) throughout the policy lifetime
  • Maximum sum assured £1,000,000
  • Terminal illness cover included at no extra cost
  • Available through Reassured from 20p-a-day

Level term life insurance will cover you for a set period and will pay out if you pass away during this time.

The pay out for your loved ones remains fixed throughout the policy term.

This means it holds its value and won’t change overtime.

Due to the large pay out potential, level term life insurance is often used to help protect an interest-only mortgage, other large debts and/or family living costs.

You could choose a term length that ends when you reach retirement age, to help replace your income for your loved ones should you pass away.

Compare level term life insurance from some of the UK’s best insurers through Reassured.

Simply get in touch for your fee-free quotes.

Decreasing term life insurance for contractors

Decreasing term life insurance for contractors
  • Provides cover for a specified period (for example, up to 40 years)
  • Pay out will be made if you pass away during this time
  • The pay out decreases throughout the policy lifetime
  • Maximum sum assured £1,000,000
  • Terminal illness cover included at no extra cost
  • Available through Reassured from 20p-a-day ¥

Decreasing term life insurance will cover you for a set period and will pay out if you pass away during this time.

The pay out for your loved ones will reduce throughout the policy term.

For this reason, it’s often used to help protect a repayment mortgage as the sum assured can mirror your remaining mortgage balance and reduce at the same rate.

This reduction will either be monthly or annually depending on your policy and insurer.

Decreasing term life insurance is typically the cheapest form of cover, ideal for those on a tight budget.

Reassured can help you compare decreasing term life insurance from top UK insurers.

A friendly member of our team can provide you with our best quotes, simply get in touch.

Whole of life insurance for contractors

Whole of life insurance for contractors
  • Provides cover for the rest of your life
  • Pay out is guaranteed when you pass away
  • The pay out will remain fixed throughout the policy lifetime
  • Maximum sum assured £1,000,000
  • Could be an expensive option if paying premiums over a long period
  • Available through Reassured from 20p-a-day ±

Whole of life insurance will cover you for the rest of your life.

This means a pay out is guaranteed to your loved ones when you pass away (not if).

As a pay out is guaranteed, whole of life insurance is often used to help cover funeral costs and/or provide an inheritance.

If you have a large estate, it could also allow you to leave a sum to help loved ones cover inheritance tax.

However, you’ll be required to pay premiums for the rest of your life, which could be costly over a long period.

If you think whole of life insurance is right for you, our expert team can help you find an affordable deal.

We can compare quotes and provide you with our best deals. Simply get in touch.

Family income benefit for contractors

Family income benefit for contractors
  • Provides cover for a specified period (for example, up to 40 years)
  • Pay outs will commence if you pass away during this time
  • Pay out is made in monthly payments rather than a lump sum (like an income)
  • Monthly payments are fixed
  • Could pay out up to £5,000 per month (this can vary depending on the insurer)
  • Terminal illness cover included at no extra cost
  • Available through Reassured from 20p-a-day ¤

Family income benefit is an alternative form of life insurance.

Rather than a lump sum payment, the policy will pay out in monthly payments (like an income).

If you’re the main or sole breadwinner of the family, this form of cover could help replace your income should the worst happen.

Similar to term life insurance, you’ll be covered for a set period and the pay outs will commence if you pass away during this time.

After your passing, your loved ones will receive payments for the remainder of the policy term. For example, if your policy term is 30 years and you pass away 5 years into the policy, it will pay out for the remaining 25 years.

You may wish to choose a term length that aligns with your working life to help protect your income.

Compare family income benefit, free of charge, through Reassured.

Relevant life insurance for contractors

Relevant life insurance for contractors
  • Available to contractors with their own limited company
  • Cover is term based, providing cover for a specified period (often up to 50 years)
  • You have the option to cover your own life or the life of another employee
  • Premiums are paid for by your company, making them a business expense
  • Can allow you to provide a form of death in service benefit (as you may not be eligible for larger group schemes)
  • The policy will be written in trust
  • Not currently available through Reassured

Relevant life insurance is a policy which can be taken out by contractors with their own limited company.

This can allow you to provide life cover to an employee. Any employee can benefit from this policy, including the company director.

As the policy is secured and paid for by your business, the premiums can be classed as a business expense (making them tax deductible).

As with a standard life insurance policy, a lump sum pay out will be made to the insured persons family. However, rather than choosing a sum assured, the cover amount is often based on income.

The policy will be written in trust, which can detach the pay out from the insured person’s estate, meaning 40% inheritance tax is avoided or minimised for loved ones.

Relevant life insurance isn’t something that’s currently offered by Reassured. But we can help you compare personal life insurance plans from top UK providers.

How much is life insurance for contractors?

The price you pay for life insurance as a contractor will depend on your personal circumstances.

During the application you’ll be required to provide insurers with key information, including:

This, along with details about your policy will allow insurers to accurately assess your level of risk and calculate your monthly life insurance premium accordingly.

Depending on your line of work, you may need to answer further questions to establish whether your occupation is high-risk.

For example, if you work in construction and are regularly working from height or around heavy/dangerous machinery you may pay more than an IT contractor who works in an office.

Rest assured it can still be possible to find affordable cover and Reassured can help you to do this.

We can compare quotes from leading mainstream providers and specialist insurers to find you our best quotes.


The table below shows example pricing for a contractor (with a low-risk occupation), who is a non-smoker in good health. Quotes are based on a level term life insurance policy with a 20-year term for £150,000 of cover:

AgePrice per month
20£3.53
25£4.27
30£5.30
35£7.61
40£10.54
45£15.74
50£25.34


Save time and money by comparing quotes through Reassured. A friendly member of our team is waiting to find you a fantastic deal.

What other policies are available for contractors?

Critical illness cover for contractors

An extra layer of protection added to life insurance.

  • You can choose to add this to your life insurance policy for an additional cost
  • You can claim for serious illness (that’s listed within the policy)
  • Pays out in a lump sum
  • This could help to replace lost income and/or pay for private medical fees
  • Once a pay out has been made, cover will expire (including life insurance)
  • Available through Reassured from 33p-a-day º
Income protection for contractors

Protect your income in the event of illness or injury.

  • Up to 70% of your usual income could be paid out
  • Provides monthly (tax-free) payments to mimic your income
  • You’ll be protected against illness and injury
  • Can help to cover essential living costs while you’re unable to work
  • Executive income protection is also available for owners of limited companies
  • Available through Reassured from 20p-a-day
Over 50 plans for contractors

Guaranteed acceptance for UK residents aged 50 - 85.

  • No medical information required during the application process
  • Cover lasts for life, guaranteeing a pay out
  • Maximum sum assured £20,000 (depending on your personal circumstances and budget)
  • Can help to cover funeral costs and/or provide a small inheritance for loved ones
  • Available through Reassured from 20p-a-day +

Protecting your self-employed income can be vital in helping you and your loved ones make ends meet if you were unable to work.

Why not read our complete income protection for contractors’ guide for more information?

Contractor life insurance FAQS

Can I pay for life insurance through my business?

For contractors that secure a relevant life insurance policy, you’ll be able to pay for the policy through your business.

This is because the policy is taken out by a business to provide life cover to an employee (this could be any employee, including the director of the limited company).

A standard personal policy, such as term or whole of life insurance, can’t be purchased through your business.

Is life insurance tax deductible?

A relevant life insurance policy can be tax-deductible for contractors with their own limited company.

This is because a relevant life insurance policy is taken out and paid for by your limited company.

As the premiums will be paid for by the business, they can be claimed as a business expense making then tax-deductible.

Can sole traders secure relevant life insurance?

No, in order to secure relevant life insurance, you’ll need a company set up to take out and pay for the policy.

As a sole trader, you’ll be able to secure a personal life insurance policy instead.

What if my occupation is considered as high-risk?

Even if you’re occupation is considered as high-risk by insurers, it can still be possible to secure cover.

It’s unlikely you’ll be declined due to your occupation. What’s more likely is that your premiums will be inflated to compensate for the increased risk.

It should still be possible to secure an affordable deal through mainstream providers.

However, if other high-risk factors are identified (for example, a pre-existing medical condition) it could be beneficial to secure cover through a specialist insurer.

These are providers who specialise in offering cover to high-risk or non-standard applicants.

Reassured can save you time and money by comparing both mainstream and specialist insurers - allowing you to find suitable cover for your personal circumstances.

Can contractor life insurance be written in trust?

Yes, as a contractor, you can write your life insurance policy in trust.

Writing your policy in trust is a legal process which could detach your policy from your estate, allowing your loved ones to make the most of the pay out.

There are three main benefits to writing your life insurance policy in trust:

  1. Avoid/minimise inheritance tax for your loved ones - If your policy isn’t written in trust, it will form part of your estate (any property, possessions and savings you have). 40% inheritance tax is charged on any amount that takes your estate above the threshold of £325,000. If your policy is written in trust, your loved ones can benefit from a fuller pay out as it won’t be subject to inheritance tax
  2. Have greater control over your pay out - When writing your policy in trust, you can specify who you would like the funds to go to (the beneficiaries) and when. For example, if you wish the pay out to go to your children, you could state that the funds are only to be paid out to them when they reach a certain age
  3. Help loved ones avoid a lengthy probate process - After your passing your estate will need to go through probate in order for it to be distributed to your loved ones - this can take between 6 - 9 months. If your policy is detached from your estate, the pay out won’t need to go through this process, giving your loved ones faster access to the funds.

At Reassured we have a free trust writing service available with most of the policies we sell.

Our helpful team will be able to provide you with all the information you need to know and guide you through the process.


Read our complete life insurance in trust guide for more information about this free option »

Compare contractor life insurance quotes

Reassured can help UK contractors find affordable life insurance.

We do this by comparing quotes from top insurers and smaller specialists and presenting you with our best deals.

A friendly member of our team will also be on hand to

  • Provide you with all the information you need
  • Answer any questions you might have
  • Decode any jargon you might be unfamiliar with

Our life insurance broker service is award-winning and FCA-regulated and, best of all, we don’t charge a fee for our quotes.

Life insurance through Reassured starts from just 20p a day, so why not get in touch?

Sources:

[1] https://www.ibisworld.com/united-kingdom/number-of-businesses/construction-contractors/14629/

[2] https://www.nimblefins.co.uk/average-uk-household-budget

[3] https://www.sunlife.co.uk/funeral-costs/

[4] https://www.daynurseries.co.uk/advice/childcare-costs-how-much-do-you-pay-in-the-uk

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