For instance, if you are a contractor you may lose a lot of the protection you enjoyed as a full-time employee, such as sick pay, death in service, or even critical illness cover.
This means that if you become ill and are unable to work, you may be left without any income to support you or your family.
Is there protection and peace of mind available to contractors?
Yes, there are several options a contractor can choose to protect themselves, their business, and their family. The most common are life assurance, income protection, and critical illness cover. It’s important to note that these types of plans typically have no cash in value at any time and cover will cease at the end of term. If you stop paying premiums then cover will lapse.
Find out more about some of the more popular options here: Insurance. Protection. Peace of Mind | Danbro Financial Planning
Here’s the first hurdle, though. If you look at each of the above forms of cover then you will quickly find that there is a whole host of options out there. Some are pretty financially attractive too. This can make the prospect of choosing a plan that meets your's and your family’s needs a little daunting.
The difficulty is not in finding and securing any of these policies, be they critical illness, income protection, or life insurance. The hard part is actually choosing the right plan for you and your loved ones. Products and the illnesses that are covered do vary between providers, so it is important to check what is covered, any exclusions that may be contained in the plan and whether the individual illness definitions are appropriate for your circumstances.
It is really important to ensure that these types of policies are set up as correctly and tax efficiently as possible to make sure that you & your family receive the right amount of money, at the right time and in the right format in the event of a claim.
It’s easy and often convenient to be tempted to buy protection online or ‘direct’ without taking specialist advice. But, here at Danbro Financial Planning, we know this can often mean that you end up buying a solution that may not be right for your circumstances, budget or needs.
As a contractor, there are additional questions and criteria you may need to discuss, such as what does the provider class as income and how much will they be protected. There are also tax questions to be considered, such as ‘is the policy in your name as an individual or through your company?’ These need to be addressed fully in order to ascertain which policy is right for you.
It is important to review the level of cover on a regular basis to ensure it continues to meet your needs. With Income Protection plans this typically covers a maximum of around 70% of your earnings and other income that you receive may be taken into consideration when calculating the level of benefits.
Navigating your way through this complex area can be difficult and very time-consuming, which is why many contractors and self-employed people choose to use an independent financial advisor. The advisor is there to help them find the right policy, at the right price, which provides the right level of cover, all without taking their time away from their work and affecting their income.
Danbro Financial Planning are experts in this field. We actively help and support hundreds of contractors by providing them with the peace of mind they need to concentrate on their work.
If you would like some advice and support on how to protect yourself and secure your family’s future, feel free to speak to our specialist team, and we can put you on the path to finding the peace of mind you deserve.
Sam Wright is Danbro’s Marketing Manager. He produces regular content and feature articles on our digital and non-digital channels – and social platforms – for the Danbro Group and its subsidiaries, as well as having responsibility for the Company’s internal and external communications.
His background is in Journalism and Creative Writing, having previously contributed to publications such as The Daily Post, The Lancashire Evening Post, and The Blackpool Gazette.
He is a keen swimmer and avid Manchester United fan (but don’t hold that against him), and he lives in Lancashire with his wife, Sarah.