The finances of self-employed people in the UK are ‘precarious’, according to a new survey, with nearly one in three unable to last the month should they be unable to work through sickness or injury.
Research from our partner LV= into the financial health of self-employed, part-time and contract workers reveals that in a health emergency:
- More than one in ten (11%) wouldn’t be able to last ‘any time’ without using long-term savings
- Almost a third (30%) would run out of money in less than a month
- 48% wouldn’t be able to turn to friends or family for financial support
- One in ten would be forced to turn to credit cards or payday loans
Latest Office for National Statistics (ONS) figures show the largest annual increase in self-employed workers since 2016, yet, alarmingly, few would have financial back up if an unexpected illness or accident occurred. While a quarter (25%) of those surveyed said they would seek help from the state, benefits provide little or no support for this group. Statutory Sick Pay isn’t available to self-employed workers, while those who are eligible can claim a maximum of just £94.25 a week - compared to the average outgoings of £262.83 a week for self-employed or contract workers.
In addition, more than half (55%) have no life insurance, private medical insurance, critical illness cover or income protection should they find themselves unable to work due to illness or injury. Income protection provides a crucial safety net for workers - including the self-employed - following an injury or during illness, while critical illness cover pays out a lump sum should you be diagnosed with a serious or terminal illness and unable to work.
Private medical insurance, or health insurance, is available to self-employed people and helps you access treatment and specialist care faster than on the NHS, as well as in a hospital of your choice.
Nearly half of those surveyed (45%) worry that sickness will prevent them from working, while 37% worry about consistency of earnings. More than a third (35%) of those workers who took time off for illness or injury last year returned to work before they felt they had fully recovered, with half saying they did so because they couldn’t afford to take any more time off.
Head of Protection Marketing at LV= Justin Harper said: “The world of work has changed enormously over the past 20 years. Being self-employed, freelance or working on a contract basis has become the norm for all sorts of professions, from barristers to boat masters. Although it has many benefits, working for yourself means that the responsibility for providing financial safety net shifts from the employer to the individual.
“People in full-time employment commonly receive sick pay and life insurance through their employer, but self-employed people need to provide it for themselves. Although many self-employed people and contractors worry about the consequences of an accident or illness preventing them from working, too few are taking steps to protect themselves from any loss of earnings if they are unable to work.
“Many wrongly believe they would not be eligible for income protection but consulting a financial adviser will help them find a policy that best meets their needs.”
Whatever your job and lifestyle, we’ll help you find the right cover for your circumstances via our leading insurance partners. Compare income protection or speak to our advisors on 0800 862 0390 to find the best policy for you.