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Critical Illness Insurance for Contractors
Luxury or Necessity?

Most freelance workers consider critical illness insurance for contractors to be essential, here's why...

Risks and Consequences
There is a risk of developing a critical illness and as a consequence being unable to work, either temporarily whilst undergoing treatment and convalescence, or worse case permanently. Many people do not anticipate that following recovery from a critical illness they may be with left with some form of disability or impaired health.

If you are operating as a sole practitioner i.e. without an alternate, then it is likely that the consulting business would be forced to cease trading either temporarily or permanently.

Critical Illness Insurance
Critical illness insurance provides protection and pays out a one-off lump sum if the insured is diagnosed with a serious illness or disease. Some policies payout if the insured is required to undergo a particular medical or surgical procedure. Some policies combine critical illness cover with regular Life Insurance.

A typical policy will specify a list of conditions that are insured, the diagnosis of which would trigger a payment to the insured.

In the event of a claim, the lump sum can be used in any way required, for example to finance personal and business expenses during the period of incapacity or to finance alterations to the home, office or vehicles that are required to allow the insured to continue to operate and live in as normal a manner as possible.

Usually critical illness insurance will pay out even if you are able to continue working. The payment is normally tax free.

The cost of cover will vary depending on a number of factors including the sum insured, age of the insured, previous personal medical history and family medical history.

Many regard Critical Illness Insurance for contractors as an essential cover; when you're working on a freelance basis you do not enjoy the luxury of a suite of insurance benefits that are often provided by an employer.

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