Protect your family's future if the unexpected happens. Life insurance pays a tax-free lump sum, sized on your real contract earnings, to help your loved ones keep the mortgage paid and maintain their standard of living.
Level term insurance pays a fixed sum if you die within the term — £500,000 of cover is £500,000 in year one or year twenty-four. It suits family income replacement and interest-only mortgage protection, where the liability does not shrink. Decreasing term insurance reduces in line with a repayment mortgage balance, and is the standard, cost-effective way to ensure a repayment mortgage is cleared on death. Premiums are lower than level cover because the sum assured falls over time.
Whole of life cover has no end date and pays whenever death occurs, making it a tool for inheritance tax planning rather than mortgage protection. Most contractor clients need term insurance; we raise whole of life only where the estate planning case genuinely exists.
The right level of life insurance depends on your financial commitments, family responsibilities, and future goals. Most contractors should consider the following when calculating the amount of cover they need.
Your policy should provide enough cover to repay your outstanding mortgage, ensuring your family can remain in their home without financial pressure.
Consider replacing several years of your annual income so your family can continue meeting everyday living expenses if you're no longer there.
Include ongoing household expenses such as utilities, food, childcare, and other regular commitments that your dependants rely on.
Allow for planned expenses such as children's education, university fees, or financial support for other dependants.
Personal loans, credit cards, or other financial obligations should be factored into your cover so they do not become a burden on your family.
Many contractors benefit from combining decreasing term cover for the mortgage with level term cover for family protection, giving tailored cover for different financial needs.
The way an insurer calculates your earnings plays a crucial role in determining how much income protection you can receive. Choosing a contractor-friendly insurer ensures your policy reflects your true earning potential, giving you the right level of financial protection if you're unable to work.
Trust-written policies avoid the probate process, meaning funds typically reach your family in weeks rather than months — exactly when they need support most.
Since the payout never forms part of your estate, it isn't subject to inheritance tax, ensuring your beneficiaries receive the full benefit amount.
Limited company contractors should always compare a personal life policy against relevant life insurance — a policy owned and paid for by the company, with premiums treated as an allowable business expense and no benefit-in-kind charge. For a higher-rate taxpayer, the net cost saving against a personally paid policy is typically 30% to 50%.
Relevant life cover is significant enough to have its own page on this site, and for most limited company contractors it is the right vehicle for the family protection element of their cover. We run the personal-versus-relevant-life comparison for every limited company client as standard.
Life insurance is individually underwritten — your age, health, family history, smoker status and lifestyle determine the premium. Full and honest disclosure at application is essential: a policy obtained on incomplete answers risks a declined claim precisely when your family needs it most.
For contractors with health conditions, hazardous pastimes or higher-risk occupations, insurer selection matters greatly — the same disclosure can produce standard terms at one insurer and a 100% premium loading at another. We pre-screen complex cases anonymously with underwriters before any formal application, so you apply once, to the right insurer.
No — life insurance pricing is based on age, health and lifestyle, not employment structure. A contractor and an employee with identical health profiles pay the same premium. What differs is that contractors must arrange cover personally, having no employer death-in-service scheme to fall back on.
Insurers apply maximum cover multiples based on age and income — commonly 20 to 30 times annual income for younger applicants. Contractor-aware insurers assess income on salary plus dividends or contract value, not salary alone, so a day rate contractor can justify substantial cover. We evidence the income basis correctly at application.
The mortgage is the floor, not the ceiling. Clearing the mortgage keeps the roof; it does not replace the income that paid for everything under it. Most contractor families need both — decreasing cover matched to the mortgage and level cover for family income. We size both elements against your actual outgoings and dependants.
A joint life first-death policy covers two people and pays once, on the first death. It is cheaper than two single policies but leaves the survivor uninsured afterwards. Two single policies cost slightly more and pay out twice if both die within the term. For most families the two-single-policy structure is better value over time; we price both.
Policies pay for any cause of death during the term, with a standard exclusion for suicide in the first twelve months and exclusions only where material facts were not disclosed at application. This is why complete disclosure matters — done properly, life insurance claims have payout rates above 97% across the industry.
Yes — many policies include guaranteed insurability options allowing cover increases on key events (house move, new child, mortgage increase) without fresh medical underwriting. We build these options in where available, because your health at 35 should not limit your family's protection at 45.