New income protection scheme for self-employed launches – are you eligible?

LV=’s Mortgage and Rent coverage is one of the few income protection schemes available to the self-employed and now pays upwards of £2,000 per month to a policyholder’s housing costs.

According to LV=’s Wealth and Wellbeing Monitor, which analyses the behaviour of around 4,000 UK consumers, some 87 percent of self-employed do not sole traders and gig workers do not own an income protection product.

This comes to around 5.7 million people out of the country’s total workforce, with the insurer’s further research revealing that one in five self-employed and contract workers say they are unable to survive a week without work.

Furthermore, only 5 percent of renters and 12 percent of mortgage holders confirmed that they pay into an income protection scheme.

General research by LV= found an overall anxiety regarding money among private renters and mortgage holders.

Almost half, 47 percent of the UK’s mortgage holders and 54 percent of private renters admitted to currently feeling stressed.

Some 43 percent of private renters and 30 percent of mortgage holders that were polled by LV= said they are worried about money.

The insurer’s new product specifically targets freelancers as it does not require evidence of a minimum number of hours worked or proof of income, either while applying for the scheme or when making a claim.

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Self-employed: Freelancer at home

Self-employed: New income protection scheme for self-employed launches (Image: GETTY)

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Similar products have been launched within the last month, including Nationwide Building Society’s new Illness and Injury Insurance.

Nationionwide’s policy allows policyholders to protect up to 60 percent of their gross income, up to £2,000 per month, with individuals who are self-employed getting protection for up to 30 percent of their gross income.

If a policyholder is unable to work for an extended period of time, LV=’s income protection scheme will cover rent and mortgage payments of up to £2,000 per month for a maximum of one to two years per claim.

As part of the insurer’s Mortgage and Rent Guarantee, the agreed amount of cover between LV= and the policyholder will be paid in full throughout the claim.

Furthermore, this amount of cover can be changed to factor in significant life events affecting the consumer, including moving house or significant rent increases from a landlord.

However, as part of the application process, an advisor will need to confirm the cover amount does not exceed the policyholder’s mortgage or rent payment.

A tenancy agreement or copy of a mortgage offer can be used as evidence by customers when applying for the scheme.

Coinciding with the product’s launch, the insurer also confirmed the creation of a new Executive Income Protection insurance scheme, which will allow small businesses to pay sick pay to key employees.

While the scheme is available to businesses and anyone who can work, the new income protection policy has been specifically designed to cater towards those who have irregular working patterns and incomes.

Self-employed: Freelancer sitting at hom

Self-employed: LV= income protection scheme to assist renters and self-employed (Image: GETTY)

Debbie Kennedy, Protection Director at LV=, confirmed the new product was part of the insurer’s to keep with times and assist consumers who are now more likely to have fluctuating working patterns and incomes.

Kennedy said: “Working patterns have been transformed over the past 20 years and there are millions of freelance workers whose incomes fluctuate. Many would struggle to meet their mortgage or rental payments if illness or injury prevents them from working.

“LV= Mortgage and Rent Cover is the first product of its kind, focusing on under-served groups who are more prone to income shocks. It is designed to provide protection and peace of mind for people who worry about paying their mortgage or rent, if illness or injury stops them working.”

She added: “As millions of households opt to rent their homes and working patterns change, it is vital that protection providers adapt and innovate to suit the needs of advisers and their clients.

“We’ve stepped up, started from first principles and thought again about how income protection can best serve policyholders. With LV= Mortgage and Rent Cover, we can offer reassurance for consumers seeking to protect their mortgage and rent outgoings.”

William Murphy

William Murphy

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