Mortgage protection for contractors
For most people, a mortgage is likely to be the biggest debt that you'll ever take on, and so it makes sense to ensure that you're fully covered in the event of an emergency.
Mortgage protection insurance is designed to help you overcome the financial burden of paying off your mortgage due to an accident, sickness, an unexpected loss of income, serious illness, or even death.
Let's take a closer look at some of the most common mortgage protection policies for contractors so you can decide which ones are most suitable for your circumstances.
What is mortgage protection life insurance?
Mortgage protection life insurance is a type of personal protection that is usually structured to pay off your mortgage should you pass away.
There are two types of mortgage protection life insurance available – level term and decreasing term insurance.
Level term life insurance will always pay out the same amount, regardless of your outstanding mortgage balance. It's really useful if you're on an interest-only mortgage and need to cover the whole balance, or if you'd like a little bit extra left over for other costs as well as clearing the debt.
Decreasing term life insurance will typically be set up to match your mortgage balance and decrease at roughly the same rate that you're paying it off. Since the sum assured reduces, decreasing term policies are cheaper than level term policies.
Is critical illness cover available?
Yes. Critical illness cover can be added to any mortgage protection life insurance policy and will pay off the remaining balance on your mortgage should you be diagnosed with an illness covered by your policy.
Serious or critical illnesses such as certain types of heart attacks, cancers, and strokes are likely to mean you can't earn for a lengthy period with some sufferers never returning to the workplace. Critical illness insurance will give you the peace of mind you need so that you can focus on recovery rather than repaying mortgage debt.
Take a look at our Critical Illness for more details on this type of policy.
Accident & sickness insurance for contractors
Working as a contractor usually means that you won't be entitled to sick pay beyond basic SSP, however, it's often well short of what's required to fulfill monthly mortgage payments. You'll need to claim it as an employee of your company, however, and the maximum you might receive is around £90 per week.
Accident & sickness mortgage payment protection will instead pay out a monthly amount directly to your bank account should you be signed off work due to illness or injury. You'll be allowed to claim part or all of your mortgage repayments, however, the speed at which these are paid to you will depend on your chosen 'deferment period'. The longer you can wait before the policy begins to payout, the cheaper your monthly premiums will be.
For more information on any of these mortgage protection policies or for a personalised quotation, visit our contact us page and a member of our customer service team will be more than happy to assist.