Insurance Policies For Freelancers – What Should Be In It?

insurance policies for freelancers

Freelancing isn’t about sitting at hipster cafes, thoughtfully sipping on your flat white as you type occasionally on your Macbook.

As a freelancer, I’ve worked not just in cafes, but also in the hospital emergency waiting room while waiting to be admitted.

I’m lucky I’m not a Grab or Uber driver, though. Because self-employed folks like them would not even have been able to work in the event of a minor medical emergency.

As the number of freelancers in Singapore continues to grow and has already hit 200,000, a tripartite workgroup has been formed in order to address their concerns.

A recent report was released to highlight some of these concerns, which included the lack of insurance coverage that can serve their needs. Insurers are no doubt paying attention to the recommendations and very soon you might see some new insurance products aimed at freelancers.

For starters, if you’re working as a freelancer, you’d better have medical insurance. But there is nothing to protect you against other concerns such as loss of income during illness.

Here are some types of insurance coverage freelancers would like to receive.


Loss of income

When a freelancer falls sick, you can bet that his first thought isn’t about seeking medical attention or getting well. It’s about the amount of income that illness is going to potentially cost him.

Unlike salaried employees, who get paid medical leave, falling ill is a double whammy for a freelancer. Not only do you have to deal with a health issue, you are also unable to earn money during that period.

For freelancers with physically demanding jobs such as private hire drivers and sport coaches, this problem is even worse, as they cannot work remotely and are likely to need a longer recovery period before they’re healthy enough to work safely.

Insurance that covers loss of personal income for long- and short-term illnesses would thus be welcome. While insurers would probably be willing to offer payouts for more serious illnesses involving hospitalisation, it remains to be seen whether they would be willing to insure freelancers against illnesses that do not warrant hospital stays but are still serious enough to prevent them from working.

As it is already highly advisable that freelancers take out their own medical insurance policies, perhaps insurers could offer policies aimed at freelancers that, just like their other policies, can work in tandem with Medishield Life and be partially paid for using Medisave.


Disputes and legal liability

Ask any freelancer who decided to strike it out on their own to avoid the tyranny of bosses, and they’ll tell you that clients can be just as bad.

It is not uncommon for clients to pay up late and only after months of hounding, or to simply become uncontactable when fees are due. Clients also sometimes go against the terms of the contract or, in the absence of one, behave in an unconscionable way, such as by demanding extra work that wasn’t previously agreed upon.

Often, the freelancer is at the mercy of his clients, as he does not have the resources to sue them or go for mediation.

But that’s not the end of a freelancer’s legal troubles. There is also the possibility of professional liability, which can fall upon a freelancer if he gets sued for a mistake he made in the course of work. Companies usually make sure their employees are protected against such lawsuits.

Self-employed folks who negotiate contracts directly with their clients, such as designers and programmers, would probably appreciate insurance which offers support in the face of common disputes.


Medisave and CPF

While salaried employees get a portion of their income deposited directly into their Medisave accounts, freelancers only make their Medisave contributions at the end of the financial year, when their Medisaves liabilities can be calculated based on their year’s income.

This is obviously a problem, because it means a sizeable chunk of their income gets taken away at the end of the year. For those who make yearly CPF contributions during tax season, the financial burden is even higher. Those who haven’t been prudent enough about saving, or who simply haven’t been earning enough to save much, could find themselves in trouble.

That’s why some freelancers might welcome a system that enables them to pay-as-you-go in making Medisave and CPF contributions.

This could be developed in the form of a financial product with similar mechanics to investment-linked life insurance.

The freelancer would be required to pay into this policy every month according to his earnings, at the end of the year he would receive the proceeds necessary to make his Medisave and CPF contributions. Any excess could be channeled into generating interest or buying insurance coverage.

As a freelancer, what kind of insurance coverage would you like to receive? Tell us in the comments!