Income Protection Insurance for Contractors
Falling sick & being unable to work is a worry for anyone & the situation can be more problematic for a contractor. By having Income Protection Insurance in place, you & your family’s finances will be protected. In a year that we have seen the devastating effects of Covid-19, having your income protected has never been more important.
Permanent employees enjoy the benefit of 3 months paid leave when they are unable to work. As an independent contractor you are required to protect yourself & your financial affairs.
By securing an Income Protection Policy you will have the support in place during the time when you need it most, providing you and your family with peace of mind.
The Importance of Contractor Income Protection
With more than 4.8 million self-employed now active in the UK , you may believe that you can’t be insured in the same way a permanent employee can. A self-employed contractor can usually get all types of protection, including income protection and critical illness cover.
So where do you start with contractor income protection? Income protection insurance for contractors has become more sought after as the number of independent contractors increases.
Just as a full-time employee needs income protection, so too does the contractor, regardless of the sector they operate in.
3 main reason why IP is important
There are 3 main reasons why income protection is important-
- You are ring fencing your mortgage and all your financial commitments. This means if you become too unwell to work you will be able to continue to pay your mortgage and all your other financial commitments
- You are protecting your hard-earned savings and future plans. Why ruin your plan A?
- Protecting your Credit Score – this is very important if you need to take out a Mortgage/Loan/Credit card in the future.
Why you need Income Protection as a Contractor
Around a quarter of strokes happen in people of working age. 
In the UK there are nearly 200,000 hospital visits each year due to heart attacks: that’s one every three minutes. 
1 in 2 will suffer from cancer in their lifetime. 
You’re 26 times more likely to be incapacitated and off work for more than 6 months, than to die before the age of 65. 
A sole trader and their business are the same legal entity, so if you can’t meet their financial obligations as a result of illness (or death) personal assets can be seized. This could mean your family is forced to sell off assets in a time of already great despair.
How does Income Protection work?
Contractor income protection comes into action when you’re unable to work due to an injury or illness. It provides you with a financial resilience, so you can continue to receive a monthly income to cover outgoing costs such as mortgage payments, bills and childcare until you return to work or retire (whichever is first).
We tailor Income Protection to work for your circumstances. We can defer policies for up to two years. So if you had enough savings to cover your outgoings up until then, the Income Protection plan could kick in after that. However, there are policies that will cover you from the very next day after an accident or falling ill, should you not have any savings to tide you over.
It’s important to use a provider who will guide you through the various scenarios that you will find yourself in.
That’s where we come in, your trusted sidekick. We’ll arrange a sufficient policy so that you receive regular payments in the event that you need to make a claim.
A protection policy can help meet the financial impact of a critical illness or injury. It can also offer complementary services often offered within plans such as emotional, therapeutic and practical support.
Contractor income protection doesn’t have to be pricey. It can range from £13.89 per month for £1,000 tax-free cover per month  to £69.16 per month for £6,000 tax-free cover per month .
How to pay for income protection as a contractor?
You have the option to pay for your income protection plan either as an individual or you can run the policy through your limited company.
If you choose to go down the route of paying personally, you will be doing so with your post-tax income. When running it through as a business expense it is eligible for tax reductions; however, you will still have to pay tax on the payments if it’s an executive policy.
So, you will need to analyse which suits you best.
_ _ _ _ _
 IPSE, Self-employed sector surging new stats show, May 2019
 Stroke Association, State of the Nation 2017
 BHF Statistics 2017, CVD Statistics Fact Sheet
 Cancer Research UK, November 2017
 Vitality, Income Protection Cover Reasons Why, August 2016
 Based on a 24-year-old, non-smoker, working in IT, retiring at 65 could get £1,000 of cover a month with The Exeter for £13.89. Based on a 4-week waiting period. Payable for max 2 years in any one claim and subject to health underwriting.
 Based on a 24-year-old, non-smoker, working in IT, retiring at 65 could get £6,000 of cover a month with The Exeter for £69.16. Based on a 4-week waiting period and level cover. Payable for max 2 years in any one claim and subject to health underwriting.
This example is fictitious and provided for illustration purposes. The actual price will depend on your circumstances and underwriting.
Please note for this insurance product terms and conditions apply. This information is a summary only. You will receive a full policy document upon application.