Contractor Income Protection – Protecting Your World, When You Can’t

Who pays if you aren’t earning a day rate?

According to a recent study from LV, 33% of self-employed said they couldn’t survive for more than 3 months if they lost their income [1]. Leaving them vulnerable to financial shocks like long-term sickness. With this worrying statistic, could you and your family cope if you weren’t earning an income?

If you’re too ill to work, you could apply for Employment Support Allowance instead. This means for the first 13 weeks of sickness, self-employed would receive less in state benefits compared to those that are employed and eligible for Statutory Sick Pay.

Benefit

Weekly amount How long

Entitlement

Statutory Sick Pay

£89.35 Up to 28 weeks

Employed

Employment Support Allowance:
Assessment rate

£57.90 under age 25
£73.10 age 25+
Up to 13 weeks

Employed & Self-employed

Employment Support Allowance:
Work-related group
£86.95 under age 25
£102.15 age 25+
Up to 52 weeks

Employed & Self-employed

Employment Support Allowance:
Support group

£94.45 under age 25 £109.65 age 25+ n/a

Employed & Self-employed

Source: DirectGov.co.uk, Employment and Support Allowance (ESA), Sept 2017

Note: If you receive state benefits or claim money under any other insurance policy, the amount paid out by your income protection provider may be reduced.

Without the safety net of employer’s benefits such as sick pay, taking advantage of income protection could be the way to protect your family. It also means if you couldn’t work, you can avoid having to rely on state support or savings accounts you may have.

Looking to find out more about Income Protection?

With Contractor Income Protection, you can generally financially protect up to 70% of your gross salary. It’s designed to replace your income if you were to face an illness or injury and you could no longer work. It pays out a tax-free (under current legislation – tax year 2017/2018) monthly sum, which can be used to help ease any financial hardship whilst you’re unable to work.

37% self-employed think Income Protection would be too expensive [2]

Income protection doesn’t have to be pricey. For instance for a 24 year old (non-smoker, working in IT, retiring at 65, could cost 13.89 per month for £1000 cover a month, or £69.16 for £6000 per month cover.

The actual cost of cover will dependent on your personal circumstances and the level of cover required. Please contact us for a personalised illustration.

[3] Based on a 24-year-old, non-smoker, working in IT, retiring at 65 could get £1,000 of cover a month with The Exeter for £13.89. Based on a 4-week waiting period. Payable for max 2 years in any one claim and subject to health underwriting.
[4] Based on a 24-year-old, non-smoker, working in IT, retiring at 65 could get £6,000 of cover a month with The Exeter for £69.16. Based on a 4-week waiting period and level cover. Payable for max 2 years in any one claim and subject to health underwriting.

If you were thinking about saving the amount you’d put using a rainy-day savings account, you would need a significant sum to match the sort of pay-outs that can be offered by an income protection policy.

For more information about contractor income protection, speak to our expert Protection advisers. Freephone 0800 211 8700 or fill in our online enquiry form.

Terms and conditions apply. This information is a summary only. You will receive a full policy document upon application. This policy will set out the terms, conditions and limitations of this product.

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Super Contractors is a trading name of Contract Mortgages Ltd, registered in Scotland at 1st floor, 207 Bath Street, Glasgow, G2 4HZ SC465654. Contract Mortgages Ltd is an appointed representative of First Complete Ltd which is authorised by the Financial Conduct Authority (FRN: 435779) for mortgage and non-investment advice.

Sources:

[1] [2]  LV Research – Heightened risk of financial crisis for self-employed, https://www.lv.com/adviser/news/heightened-risk-financial-crisis-self-employed, Sept 2017