According to The Royal Society for the Encouragement of Arts, Manufacturers and Commerce, more than one million people in the UK work in the gig economy. Moreover, these numbers are growing, with 18 per cent of people saying they would consider gig work. These figures are made up of more than Uber drivers and delivery drivers, which is what most people think of when they think of the gig economy; over half of gig workers are in professional, administrative or creative services, and a third provide skilled manual or personal services.
Risks to income
There are lots of benefits for gig workers, but there are also downsides. The main one is the lack of employer benefits. If a gig worker can’t work because of long-term sickness or disability, they are often left having to rely on state benefits. Under Universal Credit, this means payments of £317.82 to £395.20 per month depending on circumstances, which might be significantly less than a person’s income when working, creating financial hardship.
Insurance options
To protect themselves, gig workers could consider life insurance and critical illness insurance, both of which are easy to find. They might also want to take out income protection, which can be harder to find given their fluctuating income streams. If they have set themselves up as a company, this presents an additional issue as it is more tax-efficient but reduces income, meaning they can’t get the level of cover they need.
In response to these changes, insurers are creating new products, including a minimum benefit guarantee and a weekly benefit plan. These products have been welcomed but do present potential risks; if the level of cover isn’t right, for example, people may find themselves no better or potentially worse off as benefits can be reduced for those in receipt of income protection payments.
To navigate their way through these options, many gig workers will need support. This presents a potential customer base for financial advisors that should not be ignored, and it can be facilitated by using financial advisor software such as that from https://www.intelliflo.com/.
Many gig workers will be unaware of the risks to their income or the products available to them. Advisors should consider ways to target this audience, marketing their products and linking with freelance sites.