Contractor Protection

Personal Protection for Contractors: Securing Your Family’s Future

Contemplating the impact of one’s death or a severe illness is an uncomfortable thought, but it’s a reality we must face to secure our loved one’s future. As a contractor, you don’t have the standard personal protection insurance provided by employers, so it’s essential to seek out these protections yourself.

Why Personal Protection Matters for Contractors

Contractors often lack the safety net of traditional employment benefits. Therefore, personal protection is crucial to safeguard yourself and your family from unforeseen circumstances. These protections can ensure you meet financial obligations, repay your mortgage, or replace lost income in case of disability or death.

A 2019 report by the ONS revealed that 1 in 5 people in the UK have no savings, and nearly a third of households have less than £1,000 in savings. Life insurance premiums can start from just a few pounds per week, making personal protection policies more affordable than relying solely on long-term savings.

Types of Personal Protection for Contractors

Contractors can choose from various personal protection products to meet their specific needs:

1. Life Insurance for Contractors

Life insurance provides a lump sum payment to your family in case of your death during the policy term. There are two primary types:
Level-term policies pay out a fixed sum.
Decreasing term policies pays off the remaining mortgage balance.

2. Critical Illness Cover for Contractors

Critical illness insurance protects against various severe illnesses, including heart conditions, cancers, and strokes. The lump sum payout can replace lost income, cover medical expenses, or offer financial security during recovery.

3. Income Protection for Contractors

Income protection insurance provides a replacement income if you’re unable to work due to illness, injury, or accidents. You can choose the percentage of your income to be covered and the term, ensuring coverage from day one.

4. Relevant Life Plan (RLP) for Contractors

RLP is available to contractors through their limited companies. The company owns and pays for the policy, treating premiums as a business expense, subject to specific conditions and accountant approval. The benefit is paid to a discretionary trust, allowing tax-free distribution according to your wishes.

5. Family Income Benefit

If you prefer to provide your family with a regular monthly income instead of a lump sum, a family income benefit is designed for that purpose. In case of your death, it offers ongoing monthly payments, providing long-term security.

We’re Here for You Every Step of the Way

At Contractor Mortgage Solutions, we understand the unique needs of contractors. Our experts can guide you through the different personal protection options available and help you choose the right coverage for your circumstances. Contact us today by phone at 0203 827 8560 or through email or our contact form. We’re here to support you in securing your family’s future.