Insurance for sole trader

Eliza_2

Please could you advise me about the best kind of insurance for a sole trader? My business is going pretty well now and I have secured a bank loan to develop further. The bank are suggesting I meet with their adviser to discuss insurance though they have made it clear that I may be covered sufficiently by existing insurance and that insurance is definitely not a condition of the loan.

So I am meeting with them next week but really need to understand more about what I am likely to need so that I can start comparing costs and benefits.

The bank adviser mentioned critical illness so I will look into that before the meeting but wonder if this is indeed the right thing or is there some other type of insurance I need to consider as small business owner.

I might add that on a personal level I only ever have car insurance - I'm a bit insurance-phobic and generally pretty resistant to it, so have absolutely no idea of the terminology or anything much to do with insurance. I accept though, that with a loan I need to be protected in case anything happens to me and I can't work and repay it. I do have public liability for the business though.

Very grateful for any guidance, thanks.

Eliza

InsideInsurance

If they are talking long term insurance dont bother with the appointment and go see and IFA. Banks charge silly amounts for these types of things.

From a long term perspective then one of the most common in your circumstances is Permanent Health Insurance (also known as income protection though there are other forms of IP) which will pay you a regular amount up until a preset age (normally retirement age) if you are unable to continue doing your current job due to health reasons.

CI, which they have mentioned, pay out a lump sum if you get one of a list of conditions.

Some people will have both policies, some have one or the other. Evidently if you have both there are some things like a heart attack that is covered by CI and may stop you from being able to work and so both would pay out. There can be conditions, like skin cancer, that CI would pay out on but PHI doesnt and so you then have a choice if you want to work or not. Likewise there are conditions that could stop you from working that arent covered by CI.

As a consultant/ contractor I personally have PHI but not both.

Eliza_2

Hmm, thank you. I'm going to keep the appointment just so that I have their figures to compare along with any others I will get from other sources. Also to pick their brains.

I am already of state pension age (female, 61) in the rudest of rude health - didn't realise the insurance might depend on my age but can see that in their eyes I'm an oldie.

Many thanks for the advice, will look into PHI too now. It all sounds very complicated.

Are there any companies that I could look at who would cover this loan?

InsideInsurance

If it is attached to a loan then it is more often the other form of Income Protection which is ASU (or called PPI if its actually linked to the loan). It is similar to PHI but typically only pays out for a year or two and if you were an employee would also cover unemployment, there are a few that cover self employed for business failure but most dont.

With PHI etc you can define whatever age you want that it would continue paying out until the later in life that is the more expensive the policy as both the greater the chance of a payout being necessary is and the longer that payout would be.