Coronavirus and Self-Employed Income Protection
The coronavirus outbreak provides a dramatic reminder of how vital financial stability is, globally as well as individually. If you’re one of Britain’s 5 million self-employed workers1 or if you’re employed with no sick pay, it’s never been a better time to consider protecting your income.
The Impact on Family Income for the Self-Employed
Coronavirus, or COVID-19, is a new infectious respiratory disease that affects airways and the lungs. Although it started in China, it spread at an accelerating rate, first across Asia and in March, the World Health Organization (WHO) labelled it a “global pandemic.” In a bid to reduce the spread of the virus, governments around the world have restricted the movement of people.
The far-reaching impact on revenues affected not just airlines, theme parks or restaurants, but it extended beyond the travel and leisure sectors and deeply affected manufacturing and retail. As a result, companies will go bust and people will lose their jobs in an escalation expected to cut the global economic growth in half. Sooner rather than later, everybody will be affected to some extent.
Now the big question: what will you do without an income?
Your backup plan could include:
- Using your savings;
- Moving house;
- Claiming state benefits;
- Borrowing (loans, credit cards, overdrafts);
- Receiving help from friends and family;
- Crowdfunding campaigns or asking for help on social media.
Know Your Rights to Financial Support
In order to minimise the impact ill health could have on your life, the British government provides access to the following:
- Statutory Sick Pay (SSP) – £94.25 a week for 28 weeks;
- Employment and Support Allowance (ESA) – £73.10 per week for 13 weeks.
- Support for Mortgage Interest (SMI) – requires a 39-week waiting period and helps
you pay the interest on up to £200,000 of your mortgage or loan.
UK Government’s Response to Coronavirus
While the Government first pledged to cover 80% of workers’ salaries up to £2,500, the following protective measures for freelancers and gig economy workers were announced a week later:
- Receiving from HMRC 80% of their average monthly profits over the past 3 years (limited to £2,500 a month). The grant will be paid straight into self-employed workers’ bank accounts starting with June, but will be backdated to March;
- Gaining access in full to the universal credit at the same rate as the employees’ statutory sick pay;
- Temporary suspension of the minimum income floor within the universal credit system, treating self-employed people the same as employed workers;
- Postponing the next round of self-assessment tax payments planned for the end of July 2020, to 31 January 2021.
Moving Forward: You Need To Take Action Today
From coronavirus to statistics that show over 350,0002 new cancer cases in the UK every year, we’re facing extremely unpredictable times. We insure our homes, health, pets or cars, but we often overlook our greatest asset: our capacity to work and earn income. Throughout3 our lifetime, we earn up to 2.3 million pounds .And if that’s not worth protecting, what is?
Yes, income security is a vital necessity.
The Benefits of Income Protection Insurance
Nearly 65% of people4 struggle for up to 1 year if unable to work because of illness or injury. Given the low level of state benefits available, every active professional should consider an income protection insurance uk. If we get sick or if we lose our job due to an accident or a disease, income protection provides the peace of mind we need to focus on our wellbeing. Payouts are usually based on a 50% to 70% of earnings, offering financial security during the recovery process.
1 https://www.ft.com/content/927d28e0-6847-11ea-a6ac-9122541af204
2 https://www.cancerresearchuk.org/health-professional/cancer-statistics-for-the-uk
3 https://www.rd.com/advice/work-career/how-much-money-average-person-earns-in-lifetime/ (amount was converted to British pounds)
4 https://www.legalandgeneral.com/adviser/protection/income-protection/
Insurers Will Pay Out If You’re Diagnosed With Coronavirus
If you are unable to work due to a confirmed diagnosis of Coronavirus, as a policyholder, your income is covered. Insurance companies assess and pay this type of claim as usual, as long as it falls under the policy terms and conditions. Buying the best income protection insurance is a small yet significant step towards insuring your future against the unpredictable.
To speak to one of our expert Income Protection Advisers please contact us.