More than one in 10 contractors and part-timers would not last without savings
A survey of self-employed, part-time and contract workers by LV= has revealed how exposed their finances are to an injury or illness.
It showed that 11% would not be able to last any time at all without using long-term savings, while 30% said they would run out of money in less than a month.
Nearly half (48%) said they could not turn to friends or family for financial support and one in 10 said they would be forced to turn to credit cards or payday loans.
The findings come after the Office for National Statistics (ONS) figures showed that the number of self-employed people in the UK has increased from 3.3 million in 2001 to nearly five million in 2019.
Worryingly, a quarter (25%) of those surveyed said they would turn to state benefits, even though statutory sick pay is not available to self-employed workers, and those that are can only claim a maximum of £94.25 a week - compared to the average outgoing of £262.83 a week for self-employed or contract workers, LV= research shows.
Adding to this, more than half surveyed (55%) said they did not have any life insurance, private medical insurance, critical illness cover or income protection in place in case of illness or injury, while nearly half (45%) worry that sickness will prevent them from working.
On top of that, they worry about consistency of earnings (37%) and over a third (35%) of those who took time off work returned to work before they felt as if they had fully recovered. Half said they did so because they could not afford to take any more time off.
"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," said Justin Harper, head of protection marketing at LV=. "Although it has many benefits, working for yourself means that the responsibility for providing a financial safety net shifts from the employer to the individual.
He added that 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," he said.
"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."
Turning awareness into action
'Building a more financially self-reliant society'
One in six report a common mental health problem each week
COVER podcast #2