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Critical Illness for IT Contractors in the UK
Critical Illness Insurance
For those contractors without dependents it could be argued that there is little need for traditional life insurance. As long as sufficient cover is in place to repay any outstanding mortgage or other debt in the event of your death, so that no burden is left on any remaining family members, then contractors should maybe think more about 'looking after number one'.
Of far more relevance to many is so called 'critical illness cover'. This pays out on earlier diagnosis of (i.e. not on death) a range of serious conditions. These illnesses would often have been killers even 15 years ago but are now treatable thanks to modern medical advances. However these same illnesses (that can incidentally often be traced back to the pressures of contracting-stroke, heart attack, cancer etc) can often 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 such a diagnosis - 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 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 rat race that possibly caused the illness in the first place. 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. 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 term (i.e. until children grow up /a debt is repaid) 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 or a level amount (level term assurance, LTA).
Ordinarily life cover will pay a lump sum but if you have reservations about the ability of a dependent to cope with a one off payment you may prefer to insure for a set term but have benefit payable annually if you die within the term. In this way it may be easier to for the beneficiary to budget. This scheme is known as a family income benefit (FIB)
Please feel free to fill in the finder below and we will get back to you with a competitive recommendation Critical Illness Cover "Finder"
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 ContractorFinancials 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.
Please read our Private Client Agreement which outlines the standard of service and procedures you can expect from us. Please also read our Key Facts about our services document which reconfirms our regulatory status and whether our services meet your needs. 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 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 and will assume that you are happy to proceed on the basis that our costs are covered via the contract unless you request otherwise.
Critical Illness Cover Finder:
Your Name
E-mail
Phone
Mobile
Date of Birth
Sex
Male Female
Smoker?
No Yes
Cover Required (Check one box)
LTA (Level Term Assurance)
DTA (Decreasing Term Assurance)
WOL (Whole Of Life)
FIB (Family Income Benefit)
Amount of Cover Required (In 000's)
Term (In Years)
Inflation Proofed?
No Yes
Waiver of premium?
No Yes
If joint cover is required, please enter partner's details below, else click on 'Send'.
Partner's Name
Date of Birth
Sex
Male Female
Smoker?
No Yes
Waiver of premium?
No Yes
Where did you hear of us? *required
If "other", please specify.
Comments/Queries
For security purposes - Please enter the sum of the day number and the month number eg Day = 7 + Month = 8 Enter 15 in the box!
Financial advice on these pages is being given by ContractorFinancials, which is a trading name of Contractor Financials Ltd and is regulated and authorised by the Financial Services Authority.
