Benefits of life insurance for SA’s growing gig workers

More South Africans are turning to freelance work and entrepreneurship as the country’s unemployment rate soars and traditional job opportunities become scarce.

A study by the World Bank in 2022 revealed that 10% of the country’s workforce also has a side gig.

This type of employment can offer flexibility and innovation, however, they also have challenges such as financial security and risk management. Schalk Malan, the CEO of BrightRock says most people often overlook life insurance, and this is a crucial aspect that can help during misfortunes.

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More people joining the gig economy

The study by the World Bank has shown that the country’s gig economy is growing. Those who take part in the gig economy include freelancers, independent contractors, and part-time workers. Malan says small and medium enterprises (SMEs) play a significant role in today’s economy. He says SMEs make up more than 90% of formally registered businesses in the country, employ more than half of the labour force and account for more than a third of GDP.

As crucial as life insurance is, gig workers and SME owners face several challenges when it comes to securing insurance because, unlike full-time employees, their incomes fluctuate. Not having a stable income can make it difficult for them to commit to regular insurance premiums. Having an unstable income makes them a high risk, which can result in higher premiums.

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The pros of Life Insurance

Life insurance provides a safety net for freelancers and SME owners, as it ensures one’s family is taken care of after unforeseen circumstances. “Many gig workers and SME owners are the primary breadwinners for their families. Life insurance ensures that dependants are not left destitute if the worst happens,” says Malan.

He says another benefit of life insurance for SME owners is it can provide the necessary funds to settle debts, manage operational costs, or even facilitate a smooth transition of ownership. “Owners often have personal and business-related debts. Life insurance can cover these liabilities, preventing the burden from falling on family members or business partners,” says Malan.

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Solutions for freelancers and SME owners

He says clients face significant challenges with their insurance covers when they become self-employed or experience a loss of income. For those with fluctuating incomes or a lag between work done and income received, providing proof of loss of income can be difficult, which often prevents them from receiving payouts from their insurer during temporary disability.

“By addressing the unique challenges faced and offering tailored solutions, insurers can play a pivotal role in enhancing the financial security and resilience of a significant portion of the workforce. With the right products, education, and support, insurance can provide the peace of mind that allows entrepreneurs to thrive in their entrepreneurial endeavours,” says Malan.