The gig economy has been a thing for several years now, with more and more Americans making or supplementing income via ride-sharing, food delivery, pet-sitting or errand-running services (and beyond). There are some "pros" to this type of contract work, including flexible schedules, more autonomy and (theoretically) time to pursue passion projects.
Still, gig-only workers face certain financial risks, including mercurial income streams, lower-than-average pay and a lack of employee benefits. Here are five tips for gig workers looking for a critical component of their financial protection plan: life insurance.
1. Look into term life insurance
If your gig is your only gig, chances are, money is tight. Per a 2017 study by Prudential, gig-only workers earn $36,500 a year, which is much lower than the average $62,700 full-time employees make annually. But, if your family relies on your income, don't assume you can't work afford financial protection. A term life insurance policy — which lasts for a certain period of time, then expires — can cost as little as $16 a month. (We can help you compare life insurance quotes to get covered here.)
2. Ask for guaranteed level term premiums
A level term life insurance policy comes with static premiums and a set death benefit. In other words, your monthly payment won't go up or down at all while your policy is in effect and neither will your coverage amount. Consider it one less variable you'll have to worry about as you continually rebalance your budget.
3. Buy sooner, not later
Life insurance rates rise alongside your age and the development of any health conditions. If you have dependents — or plan to one day — the best way to score a low premium is to apply when you're young and fit. Learn more ways to save on life insurance here.
4. Side hustlers need private life insurance, too
If you're a part-time gig worker with a full-time, salaried job and current or future dependents, you probably need private life insurance, too. Employer-sponsored life insurance policies provide only a small amount of coverage and you generally can't take it with you when you leave a job. A private life insurance policy can help you fill any gaps.
5. Consider life insurance a reminder to get all the coverage you need
Companies relying heavily on gig workers usually offer some protection related to their contractors' source of income. Uber and Lyft, for instance, offer rideshare insurance to their drivers, and Airbnb provides primary liability coverage for its hosts. But these policies are rarely robust and almost always riddled with fine print you'll want to know about before an accident occurs. Ask questions about any company-sponsored coverage — what are the limits? is there a deductible? what is excluded? — instead of assuming you have the insurance you need.
Beyond that, full-time gig workers can — and should — set up other traditional workplace perks, like health or disability insurance and a 401(k). We can walk you through setting up your own benefits package.