Life Insurance, Critical Illness Cover & Income Protection for IT Contractors
In this blog, we will describe what each product offers a client and then discuss the premiums.
In an ideal world, everyone would like to be fully protected and have all 3 policies. However, affordability and individual circumstances make certain products more relevant to a client.
It has become increasingly popular for employees to switch to contractor status to gain better rates of pay.
The compromise is the loss of important employee benefits:
- Sick Pay
- Private Medical Insurance
Level Term Assurance is commonly used replace death in service benefits. It provides a tax-free lump sum.
Decreasing Term Assurance is taken out to repay the mortgage in the event of death. It provides a tax-free lump sum and as the name suggests, the cover decreases to match the reducing borrowing. This cover is cheaper than level term assurance.
Where you have your own limited company, these premiums can be paid by the limited company and treated as a business expense reducing your corporation tax bill.
Critical Illness Cover
Critical illness insurance is designed to pay out a tax-free lump sum on diagnosis of a critical illness event. The basic areas covered are a heart attack, stroke, cancer and MS.
This can be arranged on a level or reducing basis.
Private Medical Insurance
To avoid long NHS waiting time for appointments and treatments, many people opt to take an individual health insurance policy. It offers the peace of mind that should you become ill or injured that you will be able to get care promptly and conveniently. You can also ensure your family.
Income protection pays out a tax-free monthly if you’re unable to work due to illness or injury.
Unlike many employer schemes that cease after three or six months, this policy can pay out until you are 65.
IP policies only pay out once a pre-agreed period has passed, generally ranging from one to 12 months after you put in a claim. The longer the ‘deferral’ period you choose, the lower your premiums.
We have produced a menu below showing the average monthly premiums to replace the benefits lost.
|Product (premiums paid monthly)|
|Repay Mortgage on Death (£250k)||££9.45||£11.93||£15.96||£24.37|
|Repay Mortgage on Death & Critical Illness (£250k)||£40.00||£56.73||£83.77||£135.95|
|Private Medical Insurance||£62.57||£70.44||£78.86||£88.56/td>|
|£2500 p.m (1 Month Deferred, until age 60)||£61.75||£74.00||£93.50||£122.75|
|£2500 p.m (3 Month Deferred, until age 60)||£33.25||£41.50||£52.50||£68.50|
|£4000 p.m (1 Month Deferred, until age 60)||£96.40||£116.00||£147.20||£194.00|
|£4000 p.m (3 Month Deferred, until age 60)||£50.80||£64.00||£81.60||£107.20|
|£6000 p. (1 Month Deferred, until age 60)||£142.60||£172.00||£218.00||£289.00|
|£6000 p. (3 Month Deferred, until age 60)||£74.20||£94.00||£120.00||£158.80/td>|
*Male, Non-Smoker, Guaranteed Premiums
You can use the above table to pick and mix your protection to give yourself an indication of prices.
If you wish to discuss your individual circumstances in more detail, please contact us.
Why Use Neil Soundy Financial Services For Your Mortgage Advice?
- We are experts in SPV / Ltd Co lending.
- Your initial consultation is free with no obligation
How Much Will It Cost Me For Your Advice?
A fee of £495 is payable on completion of the mortgage and Neil Soundy Financial Services Ltd will keep the commission received from the lender for arranging the mortgage.
Neil Soundy Financial Services Ltd is an appointed representative of HL Partnership Ltd which is authorised and regulated by the Financial Services Authority.
We do not give or imply legal or taxation advice. We recommend you contact a solicitor or accountant for advice in these areas.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
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We can discuss your current situation and the options available to you before arranging a free no-obligation meeting.