Many UK freelancers and contractors have taken out a mortgage in order to get their feet securely on the property ladder, however a significant amount of these contractors don’t have their mortgage payments protected by a life insurance policy.
This doesn’t just relate to contractors and freelancers as recent data indicates that around 40% of mortgage holders in the UK have not taken out cover that guarantees that their families and dependents will continue to be able to pay off the mortgage in the event of their death.
Mortgage repayments are one of the largest financial commitments you will have, so it only seems prudent that people take the necessary steps to protect that commitment. Many of the reasons provided for not taking life cover is that it is low on the list of people’s priorities or that their household budgets do not stretch that far.
Unlike permanent employees, self-employed contractors and freelancers do not have the benefit of a “death in service” policy providing cover of up to 5 times salary. It is left entirely up to you to make separate arrangements to protect your family and dependents in the event of death.
Are your home contents more valuable than your life?
Most contractors have no problem arranging home insurance, car insurance or professional indemnity cover, so it seems shocking that they are valuing their personal possessions over the financial security of their family and kids! We recently received a call from an IT contractor who was more concerned about insuring his laptop than protecting his family! In the past most lenders included life cover with the mortgage, but due to FSA regulations you’re not obliged to take this cover now.
If you’re prepared to insure your pets or subscribe to Sky TV then you should, without hesitation, protect your family from the impact of death. The loss of a partner or parent can be shattering but the loss of a main income earner can have a devastating additional impact on the family left behind.
Taking out a life insurance to cover a mortgage can offer self-employed freelancers the peace of mind that comes when you are able to go about your life in the knowledge that both you, and your family are protected as much as possible from potential future events.
For a moderately price premium you can insure, to a level of your choice, an amount that will be paid out to your family and kids.