How To Protect Your Income As A Contractor

What Would Happen If Illness or Injury Put You Out Of Work?

How to safeguard your earnings to ensure you’ll be able to meet your minimum financial commitments if an accident, illness or injury forces you out of work.

If there’s one thing that the Covid-19 outbreak has taught us, it’s that nothing is certain in life, and this is never truer than when you’re working as a contractor or freelance professional. As the government has committed to paying up to 80% of the wages of employees in certain industries, the future is less clear as to how freelancers, contractors and the self-employed will be supported during the coronavirus crisis. Looking forward, if you want to ensure that your future income is safe once this has all blown over, then it’s time to look into Executive Income Protection cover.

Understanding The Need for Executive Income Protection Cover

If you experience an accident or illness that affects your ability to work, an income protection policy would help you to stay on top of your financial commitments such as paying your mortgage or rent, food bills, council tax and utilities. Most employees are enrolled in health or life insurance policies that would pay out in the event that you’re unable to work, but self-employed people have zero protection unless they voluntarily take out their own cover.

When Can You Claim?

If you’re out of work for 4 weeks or more, then so long as you’ve got a valid income protection policy in place, you’ll able to claim back around 80% of your earnings. This will be in place right up to retirement age to provide you with peace of mind that your income will be guarded even as you get a little older.

What Does Your Cover Include?

With an income protection policy, you can be assured cover so long as the reason for you being out of work has not been personally inflicted. If you have suffered an illness, accident or injury that prevents you from earning money, then you will be covered. However, your insurer would automatically exclude incidents where you’re injured whilst partaking in criminal activities, or those which have been caused by alcohol or recreational drugs. Furthermore, if your health problems are the result of travelling to a country which is known for its political instability, then again you would not be covered.

Additional Policy Features

In some cases, depending on the insurer you’ve taken out contractor protection with, you may find that other costs, such as National Insurance contributions or even life assurance and pension premiums may be taken care of as part of the policy. You could expect to have 80% of your income made available to you when you’re out of work, up to a maximum of £300k, which makes this policy ideal for self employed executives and CEOs of limited companies.

Claiming Your Income

In the event that you’re incapacitated through illness or injury, you can apply for your insurer to pay your income replacement to your own limited company. This will then be paid on to you, ensuring that tax and NI contributions have been accounted for before the money reaches you.

If you’re ready to protect your future income and ensure that illnesses such as Covid-19 aren’t able to affect your financial stability throughout the remainder of your career, look into income protection cover today.

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