Introduction
Permanent employees have the benefit of 'death in service benefit' of up to 4 times salary.
However, as a contractor you no longer have the security of a company benefits package and may need to arrange your own protection for your partner, kids or other family members.
If you have bought a property and have an outstanding mortgage this will need to be covered by life insurance so that no debt is left for your family should anything happen to you.
[Note: if you have no dependants then you may still wish to insurance yourself against a critical illness with a Critical Illness Cover policy.]
Life Cover Policy
Policy aspects to consider are:
- Cover type: ‘Term cover’ or ‘whole of life’. Protection for a fixed length of time, or your entire life.
- Payment type: Lump sum or family income benefit (FIB) plan. Lump sum is paid in one go. A FIB plan pays a set income over a period of time.
- Premium Waiver: You could consider taking 'waiver of premium' as a low cost option to protect your payments against you being unable to work through sickness after 6 months.
Some reasons and uses for choosing ‘Term cover’ are:
- Provide a lump sum for those close to you to place on deposit and draw off the interest to make up for your lost income.
- Cover your life for the time that your kids will be dependent on you (say to age 18 or perhaps 21 if you hope they will go to University).
- Protect an interest only loan such as an ISA mortgage so that you leave no debts for your family to pay.
- Uses of a decreasing term assurance
- To cover a repayment (capital and interest) mortgage.
Some reasons and uses of a ‘whole of life’ policy
- Cover is required to never end.
- Can be backed up by an investment plan that can be cashed at a later stage.
Certain life policies have an investment element. It is important to understand that these investments are longer term in nature and that the value of investments and income from them can fall as well as rise. Past performance is also no guarantee of future performance.
For more details and policy prices please complete the online quotation request form.