Best Value Contractor Sickness Cover

[Martin@AS Financial]

Accident and sickness tends to be one of those squalid little policies that are flogged by banks to make their money back on a cheap mortgage. When selecting protection such as this, you should always ask for it to be quoted on an "Own Occupation" basis. I have seen far too many "Any Occupation" policies sold by banks. With own occupation - if you can not do your job due to sickness or ill health, it should pay out. With any occupation, it will only pay out if you can not do any job which means you are going to have to be in a very bad way.

In my opinion, Income Protection (PHI) is a far superior policy as it pays out until retirement. As it has already been pointed out, the problem with a 2 year policy is that it finishes after 2 years. If you are ill long term, this will leave you high and dry and unlikley to be able to seek cover elsewhere.

Finally, make sure the premiums are guaranteed (reviewable may be cheaper in the short term but will go up every year), Link the policy to RPI so the benefit cover is not eroded by inflation and choose a reputable provider that will still be around in the event that you need to claim.

[Coolshot]

To update

CF have come back with the following inflation proofed benefit policy from Unum Provident

Benefit £2,550/month with 3 month deferral =£53/month, with 6 month deferal = £41/month
Benefit £3,400/month with 3 month deferral =£70/month, with 6 month deferal = £54/month

This policy would continue to pay until I'm 65 or fit to return to work on an own occupation basis (that is my role as a Buyer, not a shelf stacker).

I posted in the legal/accounting thread about how the income from a policy would be taxed

http://forums.contractoruk.com/accou...rance-phi.html

I need to read through all the T&C's before commiting but think I'll go ahead with the £3,400 on 6 month deferred period.

[TheFaQQer]

Also think about tired cover

I'm always tired these days - will they pay out?

Failing that, should I look at tiered cover instead

[Gonzo]

I don't have any at the moment! Only the mortage gets paid off by the bank if I croak. I don't have any dependents so I've never got round to it. I used to have it with my permie role a few years ago. I'll update when Contractor Financials quote.

If you have a warchest, then think about a longer deferred period on your PHI. If you take a 3 or 6 month deferral, it can cut costs.

Also think about tired cover, eg when I was a mortgage slave I had a two year sickness and accident policy that cut in after two weeks, then a six month deferral on a larger PHI policy that ran till retirement. Thinking was the two year policy gave breathing space in the event of a serious illness, then, if something went on longer, I could tailor my household costs to match the PHI benefit.

Jessica's response provides an example of why it is a good idea to take professional advice that takes into account all your personal circumstances because there is probably more to take into account than you realise.

This means talking to a financial adviser.

My own thoughts are that a contractor would self-insure using their warchest for the start of the sickness/disability period and have a policy set up that could be claimed on after 6/12/24 months have elapsed, or however long the warchest will last.

The longer the deferred period is, the lower the premiums will be. I would question the value of a policy will only pay our for a limited time. What happens if you are ill for longer?

DISCLAIMER: I am not a financial adviser!

[downsouth]

try the guys at lifesearch, always helped me out when looking for a policy

[Jessica@WhiteFieldTax]

If you have a warchest, then think about a longer deferred period on your PHI. If you take a 3 or 6 month deferral, it can cut costs.

Also think about tired cover, eg when I was a mortgage slave I had a two year sickness and accident policy that cut in after two weeks, then a six month deferral on a larger PHI policy that ran till retirement. Thinking was the two year policy gave breathing space in the event of a serious illness, then, if something went on longer, I could tailor my household costs to match the PHI benefit.

[Coolshot]

I would be interested in this, let me know how you get on.

I've just been thinking about getting life insurance, who are you with?

I don't have any at the moment! Only the mortage gets paid off by the bank if I croak. I don't have any dependents so I've never got round to it. I used to have it with my permie role a few years ago. I'll update when Contractor Financials quote.

[woohoo]

I have one of those which would keep me going for 12 months, longer if I adjusted my spending. However if I was thinking along the lines of a serious illness/disabilty which left me unable to work for years/forever. Perhaps this is just a risk in Contracting. Someone from Contractor Financials is going to call back later as they have some products I want to have a look at.

I would be interested in this, let me know how you get on.

I've just been thinking about getting life insurance, who are you with?

[Coolshot]

I have one of those which would keep me going for 12 months, longer if I adjusted my spending. However if I was thinking along the lines of a serious illness/disabilty which left me unable to work for years/forever. Perhaps this is just a risk in Contracting. Someone from Contractor Financials is going to call back later as they have some products I want to have a look at.

[Sausage Surprise]

It's what your war chest is for shirley?

[Coolshot]

I've been contracting for a few years now, at 31 & in good health hadn't bothered with any sickness cover. However a friend of mine, same age (in a permie role) was taken ill with a long term serious illness. This made me think I should get some cover in place. My mortgage repayments are covered in the event of death or illness but I don't have any other cover.
I have Professional Indeminity & Public Liabilty cover with QDOS so I started there. They offer a sickness cover of £1,500/month for upto 12 months for £35.86/month. The T&C seems reasonable & fair.
Can anyone recomend any other companies I should look at to compare cover? Also interested to hear if anyone has made a claim & how easy it was to actually receive the payments.