Self-employed workers vulnerable to financial shocks
New research shows that many self-employed workers are highly vulnerable to financial shocks.
A survey of more than 2,000 self-employed workers in the UK found that many don’t have a reliable source of income or a safety net in case something goes wrong.
The survey, completed by life insurance providers Scottish Widows, found that around two-thirds (64%) of self-employed people don’t have a regular income and less than one in four (23%) get a monthly pay packet.
When they’re out of work, more than half of the self-employed people surveyed said they rely on personal savings to get by.
And as the cost of living increases – with significant rises seen in food, fuel and housing costs – a quarter of those surveyed said they only had enough spare cash to cover three months of costs.
The Scottish Widows poll also highlighted how 13% of self-employed people don’t have critical illness cover or life insurance. Asked why, 31% said it was because they didn’t think it was a financial priority while others said they were prepared to risk it, they didn’t need these policies, or they couldn’t afford them.
Rose St Louis from Scottish Widows said: “The self-employed don’t have the luxury of having an employer to rely on for sickness cover or health insurance, making them vulnerable to loss of income or unexpected financial shocks.
“Advisers have an important role in opening up conversations with clients to ensure that all aspects of protection are discussed, and that the right policies are in place to help create financial peace of mind.”
Miles Grady, Director of Umbrella.co.uk said: “Self-employed workers are very resilient, but events like the coronavirus pandemic show that there are some things that we can’t adapt to easily.
“Life insurance and critical illness cover can provide a safety net. There are other things that contractors can do to lower their financial risk as well – such as taking on more longer term contracts and using an umbrella company.”
For more information about working through an umbrella company, speak to a member of the team today. Call: 0800 121 6513.