Contractor Mortgages Contractor Pensions Contractors

Unlike permanent employees, contractors are not provided with financial and medical benefits as part of their contract agreements. Contractors also take on more financial risk than their permanent counterparts. As a result, contractors have to take on the responsibility of protecting themselves financially.

Over the past decade, more and more financial service providers have recognised the rapidly growing demand in products which have been tailored for the self-employed.

This is a brief overview of the key financial services products available to contractors, with links for further information.

Mortgages

As if the glut in mortgage lending isn't enough of a problem for many people, IT contractors may also have the added problem of finding it hard to prove their income.

With lenders tightening up their lending criteria and insisting on higher deposits, it is essential that you use a contractor specialist to evaluate the mortgage options open to you.

Read more about Mortgages.

IT Contractor Pensions

Whether you are inside or outside the IR35 tax rules, pensions can provide a rare tax break for IT contractors.

Recent reforms mean that you can now invest sizeable amounts in your pension - up to £235,000 per year. You can invest in a pension either personally, or via your company.

As the nature of contracting is fluid, you may well want to choose a scheme which is flexible enough to deal with changes in the way you work, and the contributions you wish to make at any one time.

Read more about Pensions.

Income Protection / Permanent Health Insurance

The nature of contracting means that you will be responsible for paying the bills if you find yourself ill and unable to find contract work. Income Protection policies will provide for such an eventuality - and can (like pensions) be paid either personally or via your company.

PHI (Permanent Health Insurance) policies will pay out after a pre-agreed length of time, and at a certain monthly rate. Naturally, the higher the payout rate you want, the higher the premiums will be.

Read more Income Protection tips and advice.

Life Cover

As the name suggests, these policies will pay out in the event of your demise and protect your dependants. Life Cover is often take out to cover things like mortgages, loans and any other debts. A term policy provides life cover for a given period of time after which time the policy will lapse. A "whole of life" plan does what it says and will pay out at some time, although this type of cover is typically more expensive than a term policy.

Read more about Life Cover policies.

Critical Illness Cover

Critical Illness cover will pay out a lump sum on diagnosis of serious illness that can help you to pay for medical bills, adjustments to your home to help you cope with the illness, or simply a holiday to recharge your batteries after what may have been a traumatic time.

Critical Illness cover is often taken out in tandem with an Income Protection policy which will give you a monthly income if you become too ill to work and will continue to pay until you return.

Read more about Critical Illness cover.

Other Services

Alongside the main financial products available to contractors and freelancers, you may also be interested in finding out more about Contractor Insurance (and in particular, Professional Indemnity insurance) and Contractor Banking services.