Freelancers: should you be insured against loss of income?

coffeeIt’s sometimes tricky being a freelancer. You’re in charge of doing all the work, of getting yourself organised, of doing your accounts, sorting out your own technical support, but for me, the most difficult part is to plan for life’s mishaps in the absence of a benefits package which might include sickness or critical illness cover.
When I started out 14 years ago, I was very concerned that an accident might stop me working and abruptly put an end to my income. You see, I’ve always played a lot of football, where one can easily dislocate or break something and lose some or all productivity. Plus I have a habit of falling upstairs (rarely down, don’t ask me why). So I immediately took income protection insurance, which guarantees that if I am unable to work for a lengthy period of time, I will get a monthly amount until I’m able to start working again. As it happens, the worst that’s happened to me since was a few cuts on my forehead after stopping a particularly fierce effort at goal with my face, but it has been a comfort knowing that I’d still be able to afford decent cheese if I broke my wrist after tripping myself up.
Then I turned 40 towards the end of last year. I thought it was time I reviewed my financial situation, and I realised that what worked for me 14 years ago was no longer adequate. To put it simply, I was worried that my partner would lose our home if I fell gravely ill and/or died sooner than expected. So I talked to one of my friends and coworkers, who is a financial adviser, and we went through my options. I was planning on getting life insurance, as it’s the only product I had heard about, but she helpfully told me that I have more chance to develop a horrible disease than to die, so I ended up taking a combined critical illness and life policy. This ensures that if I get very ill, I’ll get a tax-free sum, which I can blow on expensive restaurants and beautiful golf courses use to focus on getting better, and in the worst-case scenario, the rest gets paid to my partner when I die. She intends to use some of it to go on a round-the-world cruise, which is nice to know.
Of course, this is what works for me, but the right decision depends on everyone’s particular circumstances, so here are a few links you might find useful:
Definition of critical illness insurance
Definition of life insurance
Critical illness or income protection insurance?
Critical illness insurance: The neglected cover that could be crucial
Should I get critical illness cover?

By | 2016-04-19T15:44:35+00:00 January 16th, 2014|Freelance Translation|5 Comments

About the Author:

Celine

I am Céline Graciet, a freelance English to French translator. Since 2003 I’ve been writing on all sorts of areas linked to translation and the life of a translator.

5 Comments

  1. Emma Goldsmith January 16, 2014 at 5:22 pm - Reply

    Very interesting article, Céline. Thank you for bringing up the subject and telling us about your latest approach. I’m still at the income protection stage and would like to look at the critical illness cover, but I need to investigate how it works here in Spain. It’s the sort of thing that’s so easy to put off until it’s too late…
    Wishing you a very healthy 2014,
    Emma

  2. céline January 16, 2014 at 6:23 pm - Reply

    “… easy to put off until it’s too late.” In fact, the trigger for me was a health scare. It turned out to be a false alarm, but it definitely spurred me on. Nice blog, btw 🙂

  3. Steve Vitek January 19, 2014 at 1:07 pm - Reply

    About 20 years ago, during a particularly heated argument with my wife, she yelled at me “Shine!”, which means “Die!” in Japanese.
    It got me so mad that I stopped paying the premiums for the 20-year term life insurance policy that I had in place back then.
    The look on her face when I told her what I did was priceless to me, and she never yelled “Shine!” at me again.
    She obviously wants me to live for as long as possible now that there is no life insurance.
    We are both glad that I dropped the policy back then, as we were able to use the money on things the were really needed during those 20 years.

  4. David January 28, 2014 at 1:22 pm - Reply

    I agree with the opinion you have portrayed in the post. But I have seen many translators who believe that they are invincible and that income protection is an unnecessary expense but I think it’s necessary for freelancers. They have no employer safety net to fall back on.

  5. EP June 14, 2014 at 11:53 am - Reply

    These particular circumstances you mentioned are what it’s all about. And I like how you marked out the “blow on expensive restaurants” part!

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