• Cover in the event of long-term illness
• Protect 75% of your income
• Guarantee you income until retirement

Working in a 'salaried' job normally guarantees you three or more months pay if you are ill or involved in an accident, but as a contractor, you start losing money from the very first morning that you are ill. There are several ways that you can protect yourself from this.

Permanent Health Insurance (PHI)
PHI pays a regular monthly amount to you during your period of illness and allows you to maintain your normal standard of living. Some policies will even pay out all the way through to retirement if you suffer from a more serious accident or illness.

If you pay the premiums personally the benefits are tax free or taxable when paid by your limited company. If the company pays the premiums, they can be claimed as a legitimate business cost and you will not occur any 'benefits in kind' costs.

At Forum Wealth Management, we can advise on the most suitable policy for your circumstances. If you already have cover, we can compare it against our own internal checklist to ensure that you have the best possible protection.

The cover that is taken out depends on your individual circumstances and requirements. These can include the following options:

When the money is paid out.
Some insurance companies have what is known as a waiting or deferred period. This is the length of time before an insurance company will pay out. Typically the longer the waiting period, the lower the cost of the premiums. For example a one month waiting period will cost more than a one year waiting period, but would cover you for minor illnesses or accidents that mean you are unable to work in the short term. These waiting periods can be changed over the course of a policy to reflect your circumstances.

The amount of money required
Typically contractors will take out a policy that protects up to 75% of their income. This should be enough to cover your mortgage and other outgoing expenses, but it should also cover potential changes to your lifestyle such as modifications to your house or car etc.

When advising on a suitable policy for you, Forum Wealth Management will be checking the following:

• How the insurance company assess your income and at what level will they pay out
• Their track record in paying out on claims to other clients
• Their definitions of illness and the severity of the illness
• The length of cover required
• Inflation - £2500 per month cover now will be worth a lot less in twenty years time
• Who is paying the premium - you or your company and the tax implications of this. If your company pays the premium, you can effectively protect your existing company pension requirements, but there are also other items that need to be taken into consideration

Tax assumptions are based on current legislation which may change in the future', at the bottom of this section.