Can I be financially secure if I am self-employed?

Person thinking about being financially secure if they are self-employed

Our working patterns have been transformed over the last 20 years, a change accelerated by the pandemic with many people reconsidering their employment status.

For some, that means becoming self-employed and working freelance, either by choice or as a result of this being the best career path to meet their needs. 

How do I become financially secure if I am self-employed?

There are now more than 5 million self-employed people in the UK, this is up from 3.2 million in 2000.

For this diverse group of people, which range from millionaire partners at law firms to part-time food delivery drivers, there is a wide range in income and in demands for their services.

Self-employment can offer many benefits, such as ‘being your own boss’, flexibility and being able to reap the full rewards of your work.

However, it’s clear from the lower income levels of the self-employed during the pandemic, that being self employed can also be a bit of a financial nightmare.

In recent research by LV= one in five self-employed people say they could not survive a week without work, which could be disastrous if they were to fall ill and found themselves unable to work.

Protecting yourself whilst you’re self-employed

In the same study more than half (55%) self-employed 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 insurance is designed to pay out a regular income in the event that you are unable to work, due to accident or illness.

Following the pandemic, the market is flooded with new insurance products offering income protection targeted specifically at the self-employed.

For example, some policies do not require evidence of a minimum number of hours worked or proof of income, which can be beneficial for freelancers whose schedules are constantly changing.

Many plans offer self-employed traders up to 30 per cent of their gross income.

This can be a lifeline as, unlike people on a payroll, if you’re self-employed you won’t receive Statutory Sick Pay provided by your employer.

Choosing the right income protection

With so many options on the market, finding the right income protection solution can be time consuming and confusing.

At Bulbfin we provide financial advice to help you make the best decisions to protect your income.

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