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Being self-employed allows for a kind of freedom and autonomy that can't be achieved in the workplace, yet it also comes with a bucket load of responsibility, as you're solely in charge of securing and protecting your own income. Which is why it's so concerning that huge numbers of self-employed workers aren't so concerned about the 'protecting' aspect of it, and risk losing a collective £300 billion a year due to a lack of financial protection.
Research from Scottish Widows found that a whopping 93% of the UK's self-employed workforce have no critical illness cover whatsoever, which means they're risking financial ruin should they have to take long-term sick leave. Considering there are an estimated 4.8 million self-employed workers in the UK, that leaves huge numbers – 4.4 million – at risk.
Indeed, calculations show that taking extended sick leave would cost the typical self-employed worker an average of £67,500 a year (equating to a national financial risk of over £300 billion), which is a huge sum of money to put on the line. Some may mistakenly assume that Statutory Sick Pay will cover them, while others may expect to fall back on their savings, but considering 47% don't have a contingency plan (such as a decent savings pot), they may be disappointed.
Unfortunately, 42% of surveyed workers insisted they don't need critical illness insurance or don't see it as a financial priority, despite the fact that 76% have no employees and therefore no cover should they be unable to perform the work themselves. Another 62% have no other income outside of their business and 48% say that their household relies on their income alone, while 70% don't have any life insurance, either, so they're also putting their dependents' financial futures at risk should the worst happen.
"Self-employed workers put immeasurable amounts of time and money into getting their businesses off the ground, but our research reveals that they're failing to protect their greatest asset – themselves," said Johnny Timpson, protection specialist at Scottish Widows. "This is particularly concerning when you consider that this workforce has a more limited range of working-age welfare benefits.
"Self-employment and self-reliance go hand in hand, so it's absolutely vital that these workers have a back-up plan in place should the unexpected happen, especially with so many of their families being solely reliant on their income. No-one wants to think about the unexpected happening, but having a financial back-up plan will provide peace of mind and allow people to enjoy the many benefits that self-employment brings."
It's time to start thinking about financial protection. This kind of thing is never nice to think about, but in the world of the self-employed, it's vital to consider, as your livelihood could be on the line if you were unable to work. Start by comparing life insurance policies and critical illness cover, as well as income protection, to ensure you've got a backup plan in place.
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