Income and sickness protection insurance

[Kitten1978]

Hi,

I have been contracting now for almost 3 years and have never taken out income or sickness protection insurance.

How many of you have this insurance and do you recommend it?
I am fortunate that I do build up a nice warchest every year so always have that to fall back on, mind you I have never been out of work for over a month.

What do you think?

[steve80]

Do what's right for your family and yourself. There's no rule on this.

[SueEllen]

Some people don't have it and others like me have it.

If you are going to take out a income protection policy (PHI) you need to ensure that it will pay out to contractors whose income comes from a mixture of wages and dividends. The premiums tend to be lower if you are male and younger.

[John Constant]

Income protection

Hi, perhaps you would like to try this test. Sit down with your latest bank statement and a Highlighter. Mark off all of the essentials in your life; Mortgage, Council tax, Gas, Electric, Water, credit card & loan payments, food, transport costs, insurances. Then check your savings and work out how long the savings will last. Will they last until your retirement? If no, What plan do you have to maintain your lifestyle? No plan in place? Take Income Protection.

Where any insurance is involved, always look at the "what if...? How could I survive" scenario. If there is no answer, you need insurance.

[cojak]

I don't believe that this kind of insurance would pay out if you need it.

I'll bet that T&Cs would exclude most reasons for needing it.

[Bacchus]

Hi, perhaps you would like to try this test. Sit down with your latest bank statement and a Highlighter. Mark off all of the essentials in your life; Mortgage, Council tax, Gas, Electric, Water, credit card & loan payments, food, transport costs, insurances. Then check your savings and work out how long the savings will last. Will they last until your retirement? If no, What plan do you have to maintain your lifestyle? No plan in place? Take Income Protection.

Where any insurance is involved, always look at the "what if...? How could I survive" scenario. If there is no answer, you need insurance.

Or ask yourself this simple question; if insurance is so great for the end user, how come insurance companies have such big flash offices and so much money?

Insurance is almost always a scam, the insurance companies make the money, not the punters, and if you look at the cost/benefit of income protection it is one of the worst, it really is an area where contractors need to "self-insure"

[kingcook]

I have a pretty healthy warchest, so not needed.

Those policies also only pay out max 12 months (and if you're ill for more than 30/60/90 days).

[SueEllen]

Those policies also only pay out max 12 months (and if you're ill for more than 30/60/90 days).

Common mistake you have made you have mixed up permanent health insurance (PHI) with other forms of short term income protection.

PHI is the type you use to only be able to get from brokers after you gained advice. Now you can get it without the advice, but it's the type that pays out a sum monthly long term until you retire. You should really talk to a broker as some types are completely unsuitable for contractors due to our income being a mixture of salary and dividends. Some also refuse to pay out if your long term illness/'disability means you can do another occupation.

Other forms of income protection include accident, sickness and unemployment cover which are part of a mis-selling scandal. These types are unsuitable for contractors as your warchest should cover you for a minimum of 6 months if you are sick.

[SueEllen]

Or ask yourself this simple question; if insurance is so great for the end user, how come insurance companies have such big flash offices and so much money?

You clearly haven't the privilege of working in insurance. Their ability to not have enough office space, stained carpets, desks, chairs etc is similar to other sectors I've worked for. In fact the only clients' I've had who haven't had issues with infrastructure are the ones where most of the work is done remotely.

[TheFaQQer]

IPSE+ membership give business interruption insurance if you are in contract an unable to work through illness. Every little helps.