Income protection insurance for contractors can help you if you lose your income due to an injury or illness, or become redundant. It covers both short-term and long-term periods. The policy will pay out for a number of months depending on the type of claim made against it, and it also pays out if you’re unable to work because of sickness or injury.
What is Income Protection Insurance?
Income protection insurance is a type of insurance policy that provides cover for your income if you are unable to work due to illness or injury. It’s a form of long-term health care, so it will only pay out once the policy has run out and you have recovered from your injuries or illnesses.
If you’re self-employed, then this type of cover can be especially helpful because it means that if something happens to stop your earning potential (through sickness or accident), then there will still be money coming in every month—even though it won’t be as much as before!
How does Income Protection Insurance work?
Income protection insurance is a policy that provides you with income in the event of an injury or illness. It’s often referred to as disability insurance because it covers you for a period of time after your contract has expired, and can be written on several different levels.
You pay premiums upfront and then claim benefits if you meet the conditions:
- You have been working under your contract but are unable to work due to illness or injury;
- Your employer has terminated their contract because they consider that you no longer fit in with their business strategy;
- Your employer died unexpectedly during your employment contract period (this is called “terminated by death”).
What does Income Protection Insurance cover?
Income Protection Insurance can provide you with financial protection in the event of an unexpected or unavoidable illness, injury or accident that prevents you from working. The policy will pay out a percentage of your wages for up to 12 weeks, depending on what level of cover you have purchased.
If a client cancels their contract with your company because they are unable to carry out their obligations, this may result in loss of earnings for both parties involved; but if the original contract was written correctly and included Income Protection Insurance as part of its terms then it could help protect both parties against such losses by providing compensation where needed (e.g., if no other source exists).
1. Incapacity due to an injury or illness
Incapacity due to an injury or illness is one of the most common reasons for income protection insurance. If you suffer from a serious illness or accident and cannot work, this will likely result in your inability to earn income. The good news is that income protection insurance can help cover your bills while you recover.
You may be able to receive weekly payments for a set period of time if you have been injured at work or become ill while out on business trips. You can choose how long these periods should last – perhaps as short as a week or as long as six months – but it’s important that this information isn’t left out of your contract with the insurer so that there are no misunderstandings about what might be included in any payout amount (and vice versa).
When you think of redundancy, what comes to mind? Do you think about the day your boss hands you a pink slip and tells you that they’ve seen better days? Or do you remember being handed the news that your company was going under, leaving staff members jobless and unable to pay their mortgages or bills on time.
In these tough times for contractors, it’s easy for them to lose sight of their own personal well-being in regards to income protection insurance coverage. This can lead them down a path where they are forgetting how much money they have saved up from previous projects—and then suddenly having nothing left when disaster strikes!
Luckily, there are steps contractors can take before an unexpected event happens so that they’re prepared if something does happen:
Who can buy Income Protection Insurance?
Anyone over the age of 16 can buy Income Protection for Contractors, regardless of whether they are in regular employment or self-employed.
You may be able to buy Income Protection Insurance if:
- You are self-employed and have no job cover provided by your employer; or
- You work for a company that does not provide income protection insurance; or
- You are in regular employment but have been made redundant from your current job (or will be at some point).
How much does Income Protection Insurance cost?
The cost of Income Protection Insurance depends on the level of cover you choose. You can choose between:
- Basic – £25 a week or less for up to 12 weeks.
- Medium – £50 a week or less for up to 24 weeks.
- Maximum – A maximum of £500 a day is payable if you become unable to work due to sickness, injury or accident (but not illness). This includes expenses incurred while being treated in hospital, such as carer’s expenses and travel costs (up to 4 nights’ accommodation per week).
How long will I have to wait before receiving benefits?
The waiting period is the time you have to wait before receiving benefits. It’s usually between 3 and 12 months, but it can vary depending on your circumstances. For example, if you’re in a severe accident and need surgery or treatment immediately after injury, then this may increase your waiting period.
The same applies for all insurance policies: the waiting period starts from the date of the claim (that’s when someone makes an application for income protection insurance), so even if you make a claim at an earlier date than normal because something happened within three months of starting work as an electrician or plumber (for example), then your policy will still apply its full duration until it runs out completely—which could happen fairly quickly if there’s been no further accidents since then!
Income protection insurance can help you if you lose your income due to an injury or illness, or become redundant.
Income protection insurance is a contract between you and the insurance company. You pay a premium, which is a one-off payment, and in return receive benefits if you are unable to work due to injury or illness.
The amount of time that an injury/illness will last is also covered by this type of cover. If you cannot work for any reason after six months then your policy will pay out up until its expiry date (usually three years).
You can also claim on your income protection plan if you lose your job because there’s been some change in circumstances like:
- Your employer has gone bust – meaning it goes into liquidation so customers aren’t receiving their services anymore;
- The business closes down altogether; or
- There was industrial action affecting operations at the site where they worked which means they’re no longer able to provide services as usual
If you’re a contractor, then Contractor Income Protection is well worth considering. You can find out more information about this type of insurance by visiting our website .