Many individuals today choose to work as freelancers and this sector is predicted to grow. This trend is being accelerated by advancing technology and a changing worker focus for autonomy.

Twenty-seven year old graphic designer, Isabel Botha, is one such individual. She left a secure job in the advertising industry to make a go of it on her own. She’s part of a growing group of individuals who prioritise flexibility over stability; choose self-reliance over dependency; prefer financial freedom over financial security and who feel that working for herself really gives her the footing to follow her dreams. Isabel now employs two other people, so she feels like she’s making an impact in her own way by empowering other freelancers to earn an income on their own terms.

However, as a freelancer, Isabel doesn’t have many of the securities that permanent employees enjoy, such as sick leave. For her, no work means no pay. “If I don’t work tomorrow, I don’t get paid for tomorrow,” she says. “That’s why my income protection policy is so important to me – it allows me to do what I do.” Isabel understands that without the right insurance in place, she’d be left without a back-up plan. FMI’s 2019 claims statistics show that a person her age has a 96% chance of being unable to work for longer than two weeks due to an injury or illness during their working career.

Like anyone who has their own business, but especially a one-man band like Isabel, the consequences of experiencing an injury or illness without cover to rely on, would be devastating. But freelancers like Isabel haven’t always been able to get income protection. The nature of their job is often associated with inconsistent work, unpredictable income patterns and informal or unreliable contracts, making it difficult for insurers to assess their risk profile or to know how much to insure them for.

However, FMI has been able to pave a new way by simply changing how we define freelancers and assess their risk. FMI is now able to offer income protection to freelancers, and other independent contractors alike, redefining what life insurance means to this up and coming market.

“Given that the world of work is changing and that it’s becoming less common for people to work in traditional occupations, the insurance industry needs to make cover available to more diverse professions in order to remain relevant,” says Leza Wells, FMI’s Chief Product Actuary.

Much of the confusion that arises when freelancers apply for cover is that the term freelancer means different things to different people. Freelancers may be those who have signed a temporary or fixed-term employment contract with one or more employers and we would consider these to be independent contractors. We have developed assessment criteria that allows us to offer cover to a wide range of different people who work as independent contractors. This means that freelancers who work on non-permanent employment contracts now have a clearer process that allows them to protect their income.

But what about freelancers who don’t typically sign a non-permanent employment contract, but rather quote for business and invoice for time spent working? We consider these freelancers in a similar way to how we consider self-employed individuals.

Consider a freelance graphic designer who invoices based on time spent. There is often an incorrect perception that this person works inconsistently, which introduces risk to any income protection cover offered to them. But compare someone who works like this to a self-employed electrician who visits homes to repair and install wiring and lighting and is able to purchase income protection cover. These two people perform very different occupations, but from a consistency of work perspective, they are very similar – both only work when they have jobs to perform and their risk of inconsistent work is almost identical.

At FMI, through specifically designed questions to ensure a freelancer is working relatively consistently, they will be able to take out traditional income protection. Where this is not the case, FMI’s Event Based cover offers an innovative and unique claims assessment criteria allowing many freelancers to access cover for their income.

By having a clearer understanding of the nature of their work upfront and robust assessment criteria to determine work consistency, we can now offer cover to a wide range of different freelancers – whether they work consistently every day or if they have significant periods where they have not worked.

To find out more, watch Isabel’s story.

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