Independent contractors/freelancers urged to get income protection
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The Covid-19 pandemic had an adverse effect on the livelihoods of all South Africans, but no one was hit quite as hard as independent contractors, freelancers and commission earners. FMI’s Elmarie Samuel says the coronavirus pandemic has taught us all to safeguard our earnings. In 2020, 59% of all COVID-19 related income protection pay-outs at one South African insurance company were to people younger than 39 years old.
We have heard the in person accounts and media reports that a serious bout of Covid-19 or any other life threatening illness for that matter can leave you in a hospital for weeks on end, even months. If you’re fully employed, there is sick leave, albeit limited, but if you’re a freelancer, or independent contractor, time spent ill, is equal to no money earned. However Samuel says it is in such a situation that an income protector becomes a life line.
According to Moneyweb “income protection is a long-term insurance policy designed to replace or supplement your income in the event of illness or injury which temporarily or permanently prevents you from earning an income”. Income protection is therefore based off of your monthly salary.
Previously only permanent employees could qualify for income protection, but it appears things are changing and now insurance companies are opening doors to varied income earners to insure and protect their earnings. Elmarie explains that they determine the monthly premium of freelancers/independent contractors and commission earners by looking at their average monthly earnings over a period of 12 months.
This is also to determine how much they can cover you for per month. In some cases individuals are requested to provide the insurance company with a copy of their fixed term contract. Samuels says this is to establish the risk of the applicant and then slot them into one of two income protection options for non-permanent individuals.
We have heard the in person accounts and media reports that a serious bout of Covid-19 or any other life threatening illness for that matter can leave you in a hospital for weeks on end, even months. If you’re fully employed, there is sick leave, albeit limited, but if you’re a freelancer, or independent contractor, time spent ill, is equal to no money earned. However Samuel says it is in such a situation that an income protector becomes a life line.
According to Moneyweb “income protection is a long-term insurance policy designed to replace or supplement your income in the event of illness or injury which temporarily or permanently prevents you from earning an income”. Income protection is therefore based off of your monthly salary.
Previously only permanent employees could qualify for income protection, but it appears things are changing and now insurance companies are opening doors to varied income earners to insure and protect their earnings. Elmarie explains that they determine the monthly premium of freelancers/independent contractors and commission earners by looking at their average monthly earnings over a period of 12 months.
This is also to determine how much they can cover you for per month. In some cases individuals are requested to provide the insurance company with a copy of their fixed term contract. Samuels says this is to establish the risk of the applicant and then slot them into one of two income protection options for non-permanent individuals.
