4th February 2019
With the first month of 2019 done and dusted, it’s wise to consider whether you have the right protection as a Contractor – whether you’ve just started out contracting, have been contracting for some time or are thinking about going down the contracting route soon.
Helpful questions to ask to ascertain if you do or not, include: what will happen to your family if something happened to you? If you fall ill, will you have to dip into your savings to put food on the table? To keep up with bills and mortgage payments? If you’re struggling to answer these questions, don’t panic. Here’s how you can protect yourself as a Contractor
When you work for yourself you no longer rely on an employer to provide for you when the going gets rough. Meaning that if you fall ill you won’t receive statutory sick pay, and given the low level of state benefits available, may be short of money for the duration of your illness. This is why it’s worthwhile considering an Income Protection policy. Income Protection is an insurance policy that pays out if you are unable to work due to an injury or illness. It’ll pay you a regular wage (usually 50-70% of your salary) until you are well enough to return to work. Factors such as your health will be taken into consideration, so if ‘Dry January’ or ‘Veganuary’ has had you converted to a healthier lifestyle then it will likely positively impact the premium.
Life Insurance assures your family receive a payout in the event of your death. This could be used to cover bills, your family’s day to day activities or even pay off the remainder of the mortgage. As a Contractor, you could save tax by paying for your Life Insurance through your limited company as a business expense. This is known as Relevant Life Insurance and it can save you 19% corporation tax. Though it is paid as a business expense, it’s not seen as a benefit it kind so doesn’t need to be recorded on P11D.
Did you know that 1 in 2 people born after 1960 will be diagnosed with a form of cancer during their lifetime? It’s scary to think about but it puts into perspective how important it is to have the right insurance in place. Critical Illness cover pays a tax-free lump sum if you’re diagnosed with a critical illness during the policy term. The payout can go towards improvements in the home to help you adjust, such as a ramp or stair life, as well as paying off the mortgage if you can no longer work and generate the income you previously relied on.
When you’re a Contractor, your time is money. Quite literally. If you are unable to work, your earnings will stop. As you don’t receive the same sick pay benefits as ‘regular’ employees, getting back on your feet as quickly as possible will be a priority. However, the long queues at standard NHS service could slow you down. With Brexit and the future of the NHS being unclear, Private Health Care is one way you can remain confident that you will receive the best care, in good time, so you can get back to work as soon as possible.
Now you know how to protect yourself as a Contractor, get in touch with us for a free protection review. In a conversation with one of our expert advisers you’ll be able to establish if you have the cover you need to protect yourself and your family in every eventuality. Start the new year right and review your protection.
All content is accurate at the time of publication
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