Following Martin Lewis's advice

[DaveP]

OK my question is not about insuring my toaster etc

I have a couple of personal loans etc, now although I am an employee of my own ltd company. If for any reason I was not on a contract therefore not earning then fairly quickly I'd be up tulip creek.

So I was looking for some sort of insurance to cover loans etc if I was not working on a contract.

I just thought It would be a bit messy, as technically I'd still be an employee
but a skint employee if not earning.

[minstrel]

OK my question is not about insuring my toaster etc

I have a couple of personal loans etc, now although I am an employee of my own ltd company. If for any reason I was not on a contract therefore not earning then fairly quickly I'd be up tulip creek.

So I was looking for some sort of insurance to cover loans etc if I was not working on a contract.

I just thought It would be a bit messy, as technically I'd still be an employee
but a skint employee if not earning.

How about thinking about it like this:

As a contractor you could probably optimistically expect to be in contract 60% of the time.

So, if an insurance company were to accept this probability and insure you against being out of contract they would have to offer a policy which they would expect to pay out on 40% of the time.

So, let's say you want a guaranteed income of £20k per year if you find yourself out of contract. With no "house edge" to the insurance company this would mean you would need to pay a premium of £8k (40% of £20k) per year for the policy. However, the insurance company need to make a profit to so they would probably charge you £10k.

And that would be if you could find an insurance company to offer that sort of policy which may be difficult. What would be to stop you just not looking for another contract and claiming against the policy. It would be difficult for the insurance company to guard against this.

Do you think the guys off Dragons Den take out insurance in case their businesses fail?

It's all part of the risk of being a contractor. You need to effectively build up your own insurance policy for when you are out of contract by not p!ssing all your cash up the wall when you are in a contract.

If you are looking for a safe option/insurance/guaranteed income then that's what permie jobs are for. And why contract jobs normally pay twice the permie equivalent.

[minstrel]

Another point about insurance is it's usually only a good idea to insure against events that are very unlikely to happen.

If they are unlikely to happen then the premium to benefit spread is usually likely to be large. So you might pay a few hundred pounds a year for a tens or hundreds of thousands of pounds house insurance.

This is probably a good idea because, although the probability of needing to claim is very small, if you did need to claim, it could bankrupt you.

Compare this to mobile phone insurance at £5 per month. If you lose a phone without insurance it normally costs about £50 to get a replacement. So, by getting insurance you are effectively betting that you are going to lose you phone in the next 10 months. If you lose your phone after 10 months then you would have paid more than the £50 emergency replacement in premiums.

Insurance for being out of contract is probably a very similar odds scenario to that of the mobile phone.

[up4it]

Is it possible to take out insurance against pointless insurance?

[agam]

Ant Insurance as income protection is pretty good.

In relation to contractors it will provide income protection for if your contract is terminated early

At the start date of the policy you must have been working for the same employer for at least 6 months and had your contract renewed at least once. We will then consider a claim only if your current contract is terminated prior to its expiry date. In addition, any monthly benefit will only be paid until that contract would have expired. However, if at the start date of the policy you have been working for the same employer for at least two years and have an annual contract, which has been renewed at least once and has at least six months remaining, we will consider any claim as if you had been in permanent employment.

[Gonzo]

OK my question is not about insuring my toaster

Oh alright then.

I would not have the payment protection insurance on your debts, I haven't done the sums but the fact that they are always so keen to sell it to you sends my "rip off" alert haywire.

It would probably be a good idea to have Permanent Health Insurance that pays out if you are too ill to work. They get a lot cheaper if you accept a longer period before they start paying out, as a contractor you should be able to manage that.

If it is possible for contractors to get insurance to cover periods out of work then please let me know now (but don't tell the clients because it will mean we can't charge our current rates any longer.)

[BoredBloke]

£15 Kettle. Extended five year warranty £30. I pointed out I could by two new kettles for that. So they dropped the warranty to £15. I just laughed.

I had a similar one to that at Currys when I bought a fan. The guy tried to sell me a warranty for a further 2 years for about the same price as the fan. I told him, as we live in the north of england, the chances are that the fan will only be used on the 10 hot days we get per year. If it breaks down under such a light workload then I'll be heading back to his store to get my money back as it is obviously not up to the job it was designed for.

The only extended warrnaty I have bought recently is via empire direct. They have a scheme where you pay them £20 and anything you buy from them in the next 12 months automatically comes with a 3 year warranty.