CIS Worker Life Insurance 

Is it possible to include critical illness or terminal illness cover within the same policy?

Terminal illness is where a doctor says you’ve got less than 12 months to live. That is normally included as standard, unless there are pre-existing medical conditions. Most insurance companies include terminal illness at no extra cost.

Critical illness can be bolted on to a life insurance policy and would pay out in the event that you’re diagnosed with a qualifying critical illness. It’s all done under the same policy.

How is the sum assured determined for CIS workers with fluctuating income?

The sum assured is how much would be paid out by your life insurance policy, and that’s determined by your needs. If you’re taking out life insurance to pay off the mortgage, the sum assured would start at the exact mortgage amount you’re borrowing. It would then decrease at a similar rate to your mortgage.

But life insurance can be used for different reasons, such as planning for inheritance. It can ensure that if you were to die, you’d leave your loved ones additional funds. Doing it that way is called family income benefit, which is a type of life insurance that pays out on a monthly basis.

If I’m doing this with my clients, I would look at the financial needs for the family if your income is no longer coming in. How much would be needed to run the household and ensure the family has enough money to continue?

It’s not directly linked to any fluctuation in your income; it’s just about how much would be needed and is affordable.

Are there any tax implications for the beneficiaries if I’m a CIS contractor?

I’m limited in what I can say because I’m not a tax adviser. However, with any life insurance policy, whether the policy owner is a CIS contractor or not, money received through life insurance will form part of the estate of the deceased.

There could be inheritance tax liabilities or other tax implications, but you would need to seek tax advice to explore that further.

How can a mortgage adviser help here? Anything else to add?

Importantly, you’ve got two options with life insurance. You can apply on your own if you know exactly what you’re doing. But there are different types of life insurance policies, and if you’re taking this to cover a mortgage, you need to read the small print. Not every policy will cover a mortgage.

Having a mortgage adviser who’s also a protection adviser will ensure that you have the right advice and the right policy to meet your needs.

Key Takeaways:

• Most CIS workers are eligible for life insurance, though a few high-risk jobs (such as deep-sea divers or certain working-at-height roles) might face challenges or exclusions.
• Unlike income protection, the provider generally won’t require proof of income for life insurance unless premiums are unusually high. Advisers typically use an annualised gross CIS income, but a realistic figure is the main requirement.
• Life insurance policies cover personal liabilities, but a separate, commercial policy is needed for business liabilities. Terminal illness cover is often included as standard, and critical illness cover can be added.
• Policies can be rigid, but a ‘guaranteed insurability’ option allows for an increase in cover (often up to 30% or £60,000) upon specific life events like marriage, having children, or moving home, without additional underwriting.
• Having an adviser who is both a mortgage and protection adviser is recommended to ensure the chosen life insurance policy is the right fit, especially when intending to cover a mortgage, as not every policy will do so.
  
  

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Approved by The Openwork Partnership on 12/01/2026.