Many of us don’t realise just how quickly our money would run out if anything happened to us or our partner as a result of long term sickness, injury, a serious illness or death.
Those in permanent employment who may be unable to work due to illness or injury can generally expect to receive sick pay for 3 months or more. However, contractors like you could start to suffer financial loss the moment you are unable to work.
So, it makes sense to protect yourself and your family against the unexpected. That’s why we’ve partnered with Foster Denovo, a multi-award winning firm of financial advisers, who specialise in providing protection for contractors like you.
Income Protection Tips from Foster Denovo
Be realistic when planning how much income you will need
You can protect up to 65% of your income. However, you may be keen to cut this back to make sure your insurance payments are low but you need to be realistic about how much income you will need to pay your bills and other expenses if you are ill or injured over a prolonged period of time.
Make sure that your policy is set up to pay out if you are unable to work in your own occupation, not any occupation
Some income protection policies will only pay out if you are unable to carry out any role, not just your specific job role. It is crucial that you check this is not the case within your policy as although you may be too ill or injured to carry out your contracting role, you may still be fit enough to work in a poorly paid admin position. In which case, your insurer would not pay out.
Make sure your insurance provider will pay out – ask for their stats
Fingers crossed you will never need to use your income protection. However, if you do suffer an accident or a serious illness, you need to know that your insurance policy will pay out fairly and quickly. Ask your adviser to provide evidence of previous payouts from the insurance provider they are recommending.
The latest figures from the Association of British Insurers (ABI) and Group Risk Development (GRiD) showed that virtually all protection insurance claims (97%) were paid in 2016[i].
Ensure the policy covers you to your chosen retirement date and that your benefits are inflation proofed
Depending on how serious your illness or injury is, you may not be able to return to work at all. You will, therefore, need to ensure that your insurance policy covers you up to your chosen retirement date.
Also, due to the nature of inflation, the amount you can afford to live on at the moment will not be the same in 10 years time. You need to make sure that your policy takes inflation into account, this is known as indexation or escalation.
Whether you’re looking to insure against loss of income due to illness or injury, or you’d like life insurance, we believe Foster Denovo can help.
For immediate help on choosing the right policy for you or for more detailed information, call Foster Denovo on 0330 332 7866*.
*Calls are charged at your standard landline rate.
Foster Denovo Limited is authorised and regulated by the Financial Conduct Authority.
[i] ABI, Protection insurers pay out £13m per day in claims, May 2017, (https://www.abi.org.uk/news/news-articles/2017/05/protection-insurers-pay-out-13m-per-day-in-claims/)