Income Protection for Contractors

If you're a contractor and illness or injury stopped you working tomorrow, your income would usually stop the same day. There's no employer sick pay, no death-in-service benefit and no automatic safety net. Income protection for contractors replaces part of your income while you can't work, so the bills keep getting paid while you recover.

As a contractor, you typically won't have:

• Statutory or company sick pay if you're unable to work
• Death-in-service life cover from an employer
• Any income at all between contracts if you're too ill to find the next one

If that sounds familiar, it's worth a conversation with one of our advisers. There's no fee for our advice.

Why contractors need to think about protection differently

When you're employed, you generally know that if you're off sick, some money will still land in your account, at least for a while. Contractors don't have that. Statutory Sick Pay is paid by an employer, so if you're contracting through your own limited company or as a sole trader, it usually isn't there for you. That makes income protection a much higher priority than it is for someone in permanent employment.

Choosing the right income protection for contractors

It's worth being specific about what kind of cover actually helps. "Own occupation" policies pay out if you can't do your own job due to illness or injury, even if you could in theory do a different, lower-skilled one. For contractors in specialist or highly skilled roles, this matters: a cheaper "any occupation" policy may not pay out when you need it.

The deferred period (how long you wait before a claim starts paying) can be set to match your savings buffer or typical gap between contracts. This can help manage the premium without leaving you exposed in the early weeks of a claim. Where your medical history makes standard cover hard to arrange, our non-medical underwriting page covers the options available.

Life cover and critical illness: filling the other gaps

There's no death-in-service benefit as a contractor, unlike many employed roles where it's provided automatically. It's one of the most commonly overlooked gaps when someone moves from employment into contracting, so it's worth putting dedicated life cover in place rather than assuming something similar carries over.

Critical illness cover is worth considering alongside income protection. It pays a lump sum if you're diagnosed with a serious condition covered by the policy, which can help with costs a monthly income won't touch, such as paying down a mortgage or adapting your home.

Why arrange your cover through TLD

• Honest, in-person advice. We recommend what actually fits your circumstances and budget
• Access to leading UK insurers, including specialist insurers for certain occupations
• 12,800+ plans arranged and £1.07bn+ in cover placed since 2015
• Named Stockport's Three Best Rated Insurance Services, 2022 to 2026
• One point of contact: the same adviser, from quote to claim

Frequently Asked Questions

Why is income protection more important for contractors than employees?

Employed workers typically get statutory or enhanced sick pay from their employer if they're unable to work. Contractors don't have this safety net. If you can't work, your income usually stops straight away, which is why income protection is worth prioritising.

What happens if I'm between contracts when I need to claim?

This depends on the policy and insurer. Some policies require you to be actively contracting when a claim starts. We'll help you choose a policy with definitions that suit how you actually work, including periods between contracts.

What's "own occupation" cover and why does it matter for specialists?

"Own occupation" cover pays out if you can't do your specific job due to illness or injury, even if you could in theory do a different type of work. This matters most for contractors in specialist or highly skilled roles, where an "any occupation" definition could leave you underinsured.

Do I get death-in-service cover as a contractor?

No. Death-in-service benefit is provided by an employer, so as a contractor you won't have it automatically. It's one of the most commonly overlooked gaps when someone moves from employment into contracting, and it's usually straightforward to put dedicated life cover in place instead.

Can I get cover if I work through an umbrella company?

Yes, in most cases. Cover is based on your actual working arrangement and income rather than the payment structure, though we'll factor in how your income is evidenced when recommending suitable policies.

Should I also consider critical illness cover as a contractor?

It's worth considering. Income protection replaces part of your monthly income while you can't work, while critical illness cover pays a lump sum on diagnosis of a serious condition covered by the policy. Many contractors benefit from having both. Speak to one of our advisers to see what would suit your circumstances.