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Since it reached the UK in 2020, the coronavirus pandemic has affected millions of Brits in a variety of ways. For many people, the biggest impact was financial, as many households struggled to pay their bills on reduced incomes.
One of the groups most affected by the pandemic were the self-employed, as many of them were unable to trade normally and had to rely on government support. According to a recent survey from the London School of Economics, more than a quarter of Brits who work this way reported difficulty covering their basic expenses.
If you’re self-employed, the pandemic should be a wake-up call for how essential it can be to have the right protection in place. Read on to find out why having cover is more important than ever.
Many self-employed Brits have struggled financially during the pandemic
One of the main reasons why self-employed people were more likely to be financially affected by the pandemic is because their work is often less reliable. Due to social distancing measures, many traders weren’t able to visit people’s homes while independently-owned shops and cafes couldn’t open.
According to data from Statista, before the pandemic, around 5 million Brits were self-employed. However, by December 2021, that number had fallen by around 800,000 as a drop in available work forced many to change careers.
The effects of the pandemic were made worse by the confusion surrounding available help from the government.
While the furlough scheme was available to support people who were affected by the pandemic, many found that they were ineligible for help. According to a recent report by the Institute for Fiscal Studies, this included a significant portion of the newly self-employed.
While the pandemic was a once-in-a-lifetime event, it shows that you can never predict when the unexpected will happen. However, you can protect yourself against it by having the right cover for your needs.
Having protection in place can help you to overcome any major disruptions
Have you ever wondered what might happen if you were unable to work for an extended period of time? If you’re the main, or only, breadwinner in your household then this could pose a serious problem for the financial wellbeing of your loved ones.
This is a particular issue for self-employed workers as you don’t have the safety net of sick pay from your employer.
For example, you may have to dip into your cash reserves to make ends meet or need to rely on expensive credit. If you did, this may affect your progress towards your long-term financial goals.
In a worst-case scenario, if you aren’t able to keep up with your mortgage repayments then you might even run the risk of losing your home.
The pandemic has served as an important wake-up call to many people as to how badly an unexpected shock could affect them financially. If you’re self-employed, you may want to take steps to protect yourself against any future disruptions.
As we discussed in a previous article, while having cash savings as part of an emergency fund can give you more financial resilience, having the right cover in place can be even more useful.
For example, income protection will pay you a portion of your salary, after an “excess” period, if you’re ever unable to work due to accident or illness. This can help to give you greater peace of mind to know that you’ll be able to stay on top of your bills even if the unexpected should happen.
Alternatively, critical illness cover will pay you a cash lump sum if you’re diagnosed with one of a list of serious illnesses. You can use this money to pay off any debts you may have or to maintain your current lifestyle while you recover.
Working with a broker can help you to find the cover that’s right for your needs
While you can never predict when the unexpected will happen, you can prepare for it by putting cover in place. Of course, there are many different types of financial protection, so if you’re not sure which one is right for you, you may benefit from seeking professional advice.
When you work with a broker, they can help you to properly assess what types of cover might benefit you the most. They can also help to ensure that you don’t have to pay any more for protection than you have to.
This can give you greater peace of mind to know you’re fully protected against whatever unexpected obstacles the future may hold and confidence that you can overcome them.
Get in touch
If you want to protect yourself against future disruptions but aren’t sure which type of cover is right for you, we can help. Email us at office@verve-financial.com or call 0330 320 5048.
