What insurance should I have in place as a Contractor?

13th February 2020

Whether you’ve just started contracting, have been contracting for some time or are thinking about going down the contracting route soon it’s important to ask ‘what insurance should I have in place as a Contractor?’ A helpful starting place to answering this might be to consider the following:

  1. If you became critically ill or injured, what insurances do you have in place to maintain financially secure?
  2. In the event of your death would your loved ones be financially protected?
  3. If a claim was made against your business are you financially robust enough to meet the costs without insurance?

While these are all quite weighty questions the good news is that there are policies that you can put in place to ensure that you, your loved ones and your business are financially protected in the way you need them to be.


Income Protection

Income Protection insurance is a long-term insurance policy designed to help you if you can’t work or earn because you’re ill or injured. It ensures that you continue to receive a regular income (usually around 50-70% of how much you pay yourself) until are able to return to work, retire, pass away or your your policy term ends – whichever comes first. It is important to note that Income Protection will not cover you if you are in between contracts. It’s purely to cover you due to an illness or injury that prevents you from working and, in this way, can be seen as a substitute for sick pay.


Life Insurance

Life Insurance ensures that your family receive a payout in the event of your death. This could be used to cover bills, your family’s day to day lifestyle and child rearing costs or to pay off the remainder of the mortgage. As a director of a limited company, 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.


Critical illness Cover

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 in the event of a critical illness. 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 lift, as well as paying off the mortgage if you can no longer work and generate the income you previously relied on.


Private Health Care

When you’re a Consultant or company Director, your time is money – If you’re 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. Private Health Care is one way you can remain confident that you will receive the best care, efficiently, so you can get back to work and earning as soon as possible.


If you would like an appointment to discuss what insurances make sense for you and your circumstances, get in touch.

All content is accurate at the time of publication

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