Freelancer insurance guide – what do you need to protect yourself (2018)

Freelancer insurance guide – what do you need to protect yourself (2018)

Grab drivers get to be their own boss. They travel when they like, and sleep in till 3pm before they start work. It definitely puts the free in freelancer as they are free to do whatever they want, whenever they want.

Sounds great, until you realise how many of them live on the edge. The hours of driving in a small car, with little time to take a break, can have a serious impact on their health.

Freelancers also don’t get sick leave, don’t have predictable income, and are often under-insured. If you’re going down this route as a Grab driver or a freelancer in general, here are the types of insurance you’d should consider.

Freelancer Income Protection Insurance

One of the newest financial products on the block, Freelancer Income Protection (FLIP) by GigaCover and underwritten by Etiqa, offers protection for freelancers who can’t work. This isn’t the same as disability insurance, or unemployment insurance.

 

FLIP kicks in when you’re hospitalised for more than three days, or get medical leave for more than five days.

You then get a pay out of between $50 to $200 per day, depending on your policy tier:

 

Basic

Enhanced

Premium

Daily pay-out

$50

$100

$200

Premium per week

From $2.26

From $4.23

From $7.93

The pay-out continues for up to 12 weeks.

Coupled with critical illness, this gives you overlapping protection. Your critical illness insurance kicks in when you have a major ailment, while FLIP covers your income loss for smaller issues.

And we use the term “smaller” in a very loose sense – if you fracture your leg on a photoshoot, get a high fever, or otherwise can’t work for, say, a whole month, your income can take a severe blow.

Health insurance such as MediShield and any Integrated Shield Policies (IPs)

You may think this is automatic. But as it turns out, around one in four freelancers fail to make the necessary MediSave contributions. This can affect your health insurance coverage, particularly your IP, as these policies are usually paid via your MediSave.

MediShield is meant to cover your hospitalisation expenses, for up to Class B2 wards in government hospitals. Your IP, if you have one, can provide further pay-outs, thus covering even Class A wards in private hospitals.

As to why freelancers would want a Class B1 or Class A ward, we can give you a solid reason: you’ll probably want to work while you’re in the hospital.

We all know what happens if you can’t do your photo-editing, script writing, web development, etc. for several weeks. You’ll fall so far behind on delivery dates, you might wish whatever illness you had would kill you.

It’s hard to work in a Class C or B2 ward though, where you’re sharing a bed with so many patients. But you might be able to work well in a private hospital room, where it’s quiet and comfortable. Think about it, when deciding which IP to buy.

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Also, freelancers can benefit from buying a rider for their IP. This reduces their co-payment (the percentage of the medical bills they need to pay) to at least 5% of the total bill.

That’s important to freelancers, as your cashflow is unpredictable. Without a rider, your co-pay could end up being higher and cost you more in the long run. For example, if the co-payment amount is 10% of a typical $5,000 hospital stay, that is a whopping $500.

So don’t skip on your MediSave contributions if possible, as the only one you’re “cheating” is yourself. And reconsider any attempts to skimp on health insurance. Compared to an employee, you have less time to get back on your feet.

Critical illness insurance

Unlike a regular employer, Grab or your freelancer isn’t required to cut you any slack. If you can’t meet the terms of the contract – even if it’s because you’re diagnosed with cancer and need time to recuperate – your services can be terminated. They may be apologetic and send flowers, but they’re probably not going to keep paying you.

As a freelancer, this is a like a hard kick when you’re already down. You’re forced to deal with your serious condition, without any opportunity to rest, or even to spend your remaining time with family.

This is where critical illness coverage comes in.

There are two main types of critical illness insurance: the first type pays out immediately upon diagnosis (called Early Stage Critical Illness insurance). The second type only pays out at certain levels of severity

For example, coverage may not start when you’re diagnosed with early stage cancer, and may begin only in advanced stages.

For freelancers, it’s advisable to go for Early Stage Critical Illness insurance. That’s because you need to brace for high initial treatment costs (you don’t have group insurance, like many employees), and you don’t have any sick leave with which to recuperate.

The premiums will be higher, but late-state coverage is of limited help to freelancers. Do you want to keep working right after you’ve recovered from a heart attack or a stroke that’s deemed “not serious enough”?

Speak to a financial adviser, to compare between critical illness coverage options. As a rule of thumb, buy enough coverage so that the pay-out will cover your key expenses for up to five years.

Your client should have the right insurance

Depending on the kind of work you do, a good client should cover you under the right insurance policies. Some of these have been set out by the Tripartite Standards guidelines.

For example, freelancers in the media industry should be covered by Production Equipment Insurance, provided by the client – that way, you won’t be liable if you break a rented camera during filming.

Likewise, the client should also have Commercial General Liability; that covers the cost if your production equipment falls and hurts a bystander.

You can see further details on the Tripartite Standards website.

So, if two clients offer you roughly the same job, you might want to base your decision on which one follows Tripartite Standards.

Always try to find some kind of general insurance for your critical equipment

It would be nice if a freelance photographer could insure their $10,000 camera before they go on an overseas shoot. Too bad such a policy doesn’t seem to exist right now (at least at the time of writing).

But there are alternative ways to try and cover your crucial equipment. For example, you could cover the camera under other policies, such as home content insurance. It’s worth consulting your financial adviser for help for some alternatives.

The main point is, try to find comprehensive general insurance for your crucial equipment, whatever that may be – whether it’s a camera, your pricey Wacom tablet, or a car. And if insurance doesn’t exist, get an extended warranty.