Critical Illness Insurance cover for Contractors
Read about this vital protection and fill in our Critical Illness Cover Finder to find out more and receive personalised recommendations.
Contractors can be subjected to various work related pressure that can take a serious toll on your health. Lack of mobility during the working day, rushed breaktimes and the stress associated with responsibilities and invariably tight deadlines can all have an impact on a previously health individual.
Such lifestyle related illness can have a great impact on freelancers' financial health too and critical illness cover is designed to pay out a lump sum of diagnosis , rather than necessarily death from, a range of serious conditions. This cover can be of far more relevance to many contractors life insurance which pays out only on your death.
Many illnesses would often have been killers even 15 years ago are now debilitating but often treatable thanks to modern medical advances. However these same illnesses can leave you in a reduced state of health. For a regular monthly premium a contractor can arrange for a lump sum to be provided on diagnosis of such an illness - funds that will to help pay for a period of convalescence, pay for changes to home or car to accommodate a reduced state of mobility and go towards maintaining your independence. Without, perhaps, the burden of your mortgage which can have been repaid from the proceeds of a payout and with money in the bank you can then decide whether you need to get back into the rat race that put you in hospital in the first place !
This cover goes hand in hand with income protection/ Permanent Health Insurance (PHI) which pays a monthly income in event of illness but which would stop once you were assessed as having made a satisfactory return to health.
Unfortunately this early suspension of the payments on a PHI policy means you're forced back to work when perhaps you need to look at a change in direction for your life. The lump sum pay out from a critical illness policy would be yours to keep, regardless of a return to some measure of good health and could maybe allow for some changes to your work pattern etc. Again these changes could be significant in that they may help you to avoid a re-occurrence of the illness - a re-occurrence that could prove fatal a second time around.
With life cover, cost, the approach of the underwriter and the financial strength of the company (i.e. will the provider still be around to meet its obligation to you in 10 years time) are all issues to consider. However when advising contractors on critical illness we try to ensure that quotes are competitive but must also take into account very many more issues.
Important considerations when looking at critical illness cover
Medical definitions of what is covered are very important - these must be comprehensive enough to be of practical use to you in the event of a claim.
The provider must also have a good track record of actually meeting claims - with life cover alone you're either dead or your alive and so there's no question of that insurer can avoid paying benefits out!
Premiums must also remain affordable throughout so that protection can also be maintained, as you get older and even more likely to fall ill.
You can cover yourself for a fixed level amount over a set term (i.e. until retirement/ your children grow up /a debt is repaid - this cover is called Level Term) or for your entire life (Whole of life - WOL)
You also have the option of a decreasing amount of cover (decreasing Term Assurance, DTA) that will reduce in line with a reduced liability - i.e. a repayment mortgage.
Ordinarily cover will pay a lump sum but if you have reservations about the ability to discipline yourself on receipt of a one off payment you may prefer to have the option insure for a set term but have benefit payable annually during that term. In this way it may be easier to budget. This scheme is known as a family income benefit (FIB)
Stop Press: As a result of increasingly early screening for illnesses that traditionally used to be killers later in life, Critical Illnesses policies are being reviewed as the market adjusts to a far greater likelihood of claims. The number of illnesses covered have been slashed by some providers and premiums have increased.
Changes to policy wordings and increased costs can only be applied to new schemes and ContractorMoney strongly urge you to review your current circumstances now to ensure that you would be adequately protected in the event of such illnesses. The scope of these policies will alter further in the months to come but you will have locked into current definitions etc regardless of what future changes occur.
As independent advisers we are pleased to confirm we can advise you on and arrange a suitable product from across the whole market and from all of their product range.
We are happy to point out that we do not charge you a fee for our services. Instead we can rely solely on introducers commissions received from the insurers to cover the cost of advice and administration of any products that we arrange on your behalf. As part of new Financial Services Authority regulation however, we do offer you the option of being charged a fee instead. We will assume that you are happy to proceed on the commission basis and that our costs are simply covered via any policy put in place for you unless you request otherwise.
Please feel free to fill in the critical illness cover finder below and we will get back to you with a recommendation tailored to your needs.
The value of investments may fall as well as rise and past performance is not a guide to future returns.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Financial advice is given by ContractorMoney, which is a trading name of Contractor Financials Ltd and is regulated and authorised by the Financial Conduct Authority.