Life Insurance for contractors: Protecting your family and maximising financial security

As a contractor, securing life insurance is essential to replace the "death in service" benefits often lost when transitioning from traditional employment to freelancing. Life insurance offers peace of mind by ensuring your loved ones are financially protected, covering debts, funeral expenses, and providing income in your absence. For contractors, it’s also a smart financial move; some policies can be paid through your limited company as a legitimate business expense, providing tax advantages.

What types of Life Insurance are available to contractors

Whole of Life Policy
  • Offers lifelong coverage with no end date, ensuring a payout whenever you pass away.
  • May be investment-backed, keeping premiums manageable as you age.
  • Early sign-up ensures competitive pricing, and some plans offer the flexibility to cash out if needed.
Level Term Assurance
  • Covers you for a fixed period, such as until your children reach adulthood or your mortgage is paid off.
  • Pays a lump sum to your dependents, helping them invest for future income.
  • Inflation-proofing ensures the payout retains its value over time.
  • Protects your family from outstanding debts like loans or mortgages.
Decreasing term assurance
  • Offers a lump sum that reduces over time, matching the balance of a repayment mortgage.
  • Ensures your family can settle mortgage obligations, securing their home.
Family income benefit
  • Provides a regular income for your family instead of a lump sum, simplifying financial management.
  • Pays out monthly or annually over a set term, covering living expenses during challenging times.
  • The earlier a claim is made in the policy, the greater the total payout.

Why Life Insurance is a smart move for contractors

  • Financial security for your family: Life insurance ensures your loved ones are cared for financially, covering expenses such as mortgages, debts, and funeral costs while providing ongoing income for dependents.
  • Tax efficiency: Some policies, like Relevant Life Insurance, can be paid for by your limited company, reducing your corporate tax bill. These policies are treated as a business expense, adding further financial benefits.
  • Tailored coverage for contractors: Policies can be customised to fit your family’s needs and your financial goals. Options include inflation-proof payouts, flexible terms, and varying coverage levels to suit different situations.