There are two basic types of Life insurance for contractors:
Term assurance – This is a life insurance policy that lasts for a given period before becoming valueless. These policies tend to provide the most competitive premiums but will be influenced by age and health factors. Contractors use these life insurance policies to:
- Provide a family or other dependants with either a lump sum payment or a series of regular payments in the event of the contractor's death
- To provide yourself with cover at a time that your children will be most dependent upon you, if they are going to university for example
- To guarantee that there are available funds to pay off any outstanding debts such as a mortgage
Whole life cover – This kind of life insurance allows contractors to ensure that they are always covered. These policies tend to have higher premiums and be a lot less flexible.