Many UK freelancers and contractors now have mortgages based on their contracts. It’s understandable that they’re overjoyed now that their feet are on the property ladder.
The big problem is that many don’t have their mortgage repayments protected by a life insurance policy. It’s easy to overlook this essential cover after the euphoria of becoming a bona fide homeowner.
This statistic doesn’t just relate to the UK’s independent professionals. Recent data indicates that around 40% of ALL mortgage holders in the UK are without similar cover.
Here’s the big question, to go with the big problem:
How do these homeowners think their families and dependents will be able to continue to repay or pay off the mortgage if they were to die?
I know: no one likes thinking about their own mortality
But most of us like to think of everything we’ve built up crumbling after our demise even less. Even worse, the impact upon our nearest and dearest of financial insecurity without our income for them.
Mortgage repayments are one of the largest financial commitments you’ll ever make. It only seems prudent that people take the necessary steps to protect that commitment.
Many of the arguments we hear for not taking out life cover don’t hold water:
- “It’s low on my list of priorities”;
- “My household budget won’t stretch that far”;
- “I’ve got more important things to worry about. Besides, I’m not gonna die, yet…”.
Permanent employees have an employer’s death-in-service policy in place. This provides cover of up to 5 times their salary should they die whilst under the employ of the firm for whom they work. Self-employed contractors and freelancers families have no such luxury.
The responsibility to make separate provision to protect your family and dependents in the event of death is yours.
Dog, cat, washing machine, car, your life – which is most important?
Most contractors have no problem arranging home insurance, car insurance or professional indemnity cover. They’ll even pay through the nose to protect Tiddles, Spot and their Zanussi.
It seems odd that they value material possessions over the financial security of their family. Well, to us, at least.
Here’s a case in point, a real life example.
We recently received a call from an IT contractor. He wanted to insure his laptop as it was essential for his business.
When prompted if he had life cover, he said he hadn’t. Even though we explained the benefit, he was more concerned about insuring his laptop than his family.
But that’s the way it is. In truth, the FSA hasn’t helped the situation. In the past most lenders included life cover with your mortgage. But now, due to new FSA regulations, you’re no longer obliged to take out this cover.
Insure your pets? No problem. Upgrade your SKY or Virgin TV package? It’s a done deal. If you can see the value here then you should, without hesitation, protect your family from the impact of death.
The loss of any partner or parent is a devastating loss. But when they’re the main income earner, the impact upon the family left behind goes beyond emotion.
Do we need to highlight the benefits of contractor life cover?
Taking out life insurance to cover a mortgage can offer self-employed freelancers peace of mind. That deep serenity only comes from knowing that you’ve protected you and yours no matter what tomorrow brings.
The worst things is, premiums don’t have to be expensive. Even a moderate policy will insure an amount – decided by you – will go to your family and kids if you die on the job.
Cover you and your freelance income today to protect your home and family for tomorrow. It’s not as painful as you think.
Author: John Yerou
John Yerou is the owner and founder of Freelancer Financials; a trading style & trade mark of the award winning Mortgage Quest Ltd. One of the most recognised names in providing mortgages for contractors and freelancers across the UK.
In 2004 John began his career in Financial Services as an independent mortgage adviser and broker. John has been instrumental in negotiating bespoke underwriting for contractors with high street lenders.
His presence in the industry as a go-to expert is growing by the day and he is regularly cited and writes in publications both locally and nationally.