If you’re thinking about becoming self-employed, or already are, you’re likely to be an optimistic, glass-half-full, sunny-side-up kind of person.... otherwise why on earth would you do it?
We all know the main risks - uncertain income, unpaid leave, no pension, instability - so if that hasn’t put you off, you must have faith in your ability to adapt, change and generally ‘deal with it’ when things don’t go as planned.
As a bunch of start-up disrupters ourselves, that’s something we really relate to.
But as insurers, it’s our job to consider the full 360-degree spectrum of risks for any person in any situation in life, so we can offer the very best protection.
If you don’t like to feel gloomy (and would rather be doing pretty much anything than researching insurance products), here’s our quick guide to self-employed risks, and how you can protect yourself.
Top of the list (and the main cause of night sweats), here’s how to keep cool when the steady paycheque stops.
Get a ‘cushion’
Build up a ‘cushion’ of savings to bridge the gap between invoices. Just remember to pay your savings pot back when your invoices get paid.
Be careful with the work you take. What kind of client are they? How risky is their business? Are you confident they can and will pay you when the time comes.
See a financial advisor
If you’ve kissed goodbye to a corporate pension, how will you fund your retirement? Or get a mortgage? Talking to a financial advisor and planning ahead is definitely time well spent.
Get an accountant
You’ll need to keep track of all your business-related income and spend, so get a good accounting system and accountant in place so you’re all set for year-end.
You are your business, so health and wellbeing should be a priority.
Charge the right amount
Some illness is inevitable, so factor this in when setting your day/project rate. You’ll also need to rest and relax to avoid getting ill, so budget for days off and holidays like any other business would.
Don’t forget to consider how much time you’ll spend doing unpaid work, like searching for work and pitching - it all adds up! Here are a few handy guides:
VMA Group: Day Rate Calculator
Critical illness and life cover
Without getting too gloomy, you need to consider what would happen if you suffered from any serious injury or long-term illness. Critical illness/income protection is essential for a restful night’s sleep, and don’t scrimp on life insurance to help your family should the worse happen.
Again, this depends on your line of work, but you’ll probably need cover for a phone and laptop at least.
Check the small print
Don’t assume the policies you already have are enough. Some gadgets may be covered by home contents insurance, but does it apply when you’re out and about? (And by the way, does your household insurer know if you work from home? You need to tell them that too!)
Back-up a little...
...or even better, a lot. Invest in a decent external hard drive or up your cloud storage so you can get back online as soon as possible if you anything happens to your computer.
This is a real minefield, as it depends on your line of work, but here are the most common policies for freelancers and entrepreneurs.
- Professional indemnity: Covers any advice you give that may affect someone financially
- Public liability: If anyone has an injury or damage to their property because of your business
- Product liability: If there was a defect in a product you sold
- Employer liability: Covers compensation and legal fees if an employee becomes ill or has an injury because of their work (essential if you employ anyone).
But there is a huge range between different types of policies and what is included. How much is the indemnity limit? How many claims can you make in one year?
You should also check if the policy includes...
- Legal expenses, or has a free legal advice line?
- Help if criminal allegations are made against you, for loss of reputation, or breach of intellectual property?
- Client confidentiality or loss of documents cover?
- First aid cover?
- Retroactive cover, for any previous work you’ve done?
- Cover to work anywhere (UK and abroad)?
Woah. Is there another way...?
We’ve tried to keep it short, but it’s still a lot of work right? So many products to keep track of. Even if you have them all, you probably have some gaps and/or overlaps between your policies (and with your personal/household policies too).
That’s why we’re flipping the insurance market on its head. Rather than searching for lots of different insurance products, then checking if they offer enough cover for all your risks, you’ll be able to enter all your details to build a personal risk profile, then it will find all the best products for you. Just once, and all in one place.
Less time searching for insurance = more time to focus on your work, rest and play.
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