All self-employed people should know the importance of insurance as a precaution against severe debt. 'Gig' workers, who are technically self-employed but work for a company on a 'gig-by-gig' basis rather than being their own boss, seem to be particularly lacking this protection, as only 2% have access to life insurance, income protection or critical illness insurance.
This means that the vast majority would need to rely on their own savings if they were to become unable to work. The research, conducted for Zurich UK, reveals that 29% of gig workers would instead rely on state benefits if they couldn't work, while 16% would sell their possessions and 19% would go to the bank of mum and dad.
"The New Year almost always brings with it thoughts of a possible career change, but our working practices are not what they used to be," said Peter Hamilton at Zurich UK. "We are seeing more and more people opt to hold down a number of different jobs because of the flexibility that brings, but for others there is no choice. Either way, it currently means sacrificing protection and financial security that is typically offered through the workplace."
Indeed, only 47% of gig workers currently receive any kind of benefits from their gig company. This is despite respondents seeming to be happy to take a wage cut to get some protection: 28% would be happy to reduce their income by 5% in exchange for sick pay, while 14% would cut their wages for income protection, 12% would do the same for critical illness and 8% would do so for life insurance.
The Government is currently reviewing the status of gig workers and related employment practices. This may see them get a few more protections and rights in future. However, anything could happen before any changes take place. Anyone who's self-employed at the moment, whether as a gig worker or independent business person, should make sure they have at the very least some form of income protection. And if you have a family, you may want to add life insurance to that as well.
"Immediate, short-term security is as important as long-term savings, but if just 2% have access to any of life insurance, income protection or critical illness insurance via their gig company, we're facing a bigger protection gap than we realised," concluded Peter.
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