press release

Unprotected self-employed more at risk of financial crisis

  • Around two million of the country’s self-employed can’t afford to save anything each month
  • Self-employed people save less and spend more on bills than the UK average
  • Only 4% have income protection insurance to cover their outgoings if they couldn’t work, which could leave them struggling to cope financially

Nearly two million* self-employed people in the UK are unable to save any money each month leaving them vulnerable to financial shocks, according to new research by leading insurer, LV=.

With the number of self-employed workers now close to five million, the second instalment of LV=’s ‘Income Roulette’ report – a study** of debt, savings and protection among 9,000 people – explores how the self-employed would cope with an unexpected financial shock. The results show that four in ten (41%) self-employed people can’t afford to save any money each month and a further one in ten (11%) save less than £50. Furthermore, a third (33%) couldn’t survive for more than three months if they lost their income – meaning they fall short of the Money Helper’s recommended amount of savings that would allow them to be financially resilient.

When looking at barriers to saving, the figures show that monthly bills eat up the wages of nearly two thirds (62%) of self-employed people, compared to a national average of 56%, with this group also more likely to be hampered by debt (38% vs 32% national average). In addition to this, sole traders are more likely to be hit by unexpected costs such as home maintenance or car repairs (33% vs 28%).

As self-employed people don’t have the safety net of employers’ benefits, such as sick pay, they are often recommended to consider taking out some form of income protection*** to avoid having to rely on state support if they couldn’t work because of accident, sickness or disability. However, only 4% of self-employed people in LV=’s research have income protection, compared to a national average of 11%, with more than two fifths (42%) mistakenly believing that they’re not eligible for it.

Despite the lack of saving and insurance, the research shows this group is aware of the risks of self-employment – three in ten (28%) are worried about having an accident and not being able to work (vs the national average of 21%) and a similar proportion (29%) are worried about falling sick (vs 24%).

LV= is calling on the Government to give the new Single Financial Guidance Body (SFGB) a specific remit to focus on promoting UK financial resilience when it is established in 2018. Self-employment contributed £255 billion to the economy in 2016 alone****, with the Office of National Statistics crediting it as one of the defining characteristics of the UK’s economic recovery. LV= wants the SFGB to take note of this and focus on helping sole traders and small businesses, alongside other groups who at risk of financial shocks, as well as how private insurance can pay a part in increasing UK resilience.

Justin Harper, Head of Protection Policy at LV=, said: "The labour market has changed markedly in recent years, with self-employment continuing to rise. The Government’s Taylor Review sought to address the challenges of the modern workplace and ensure all workers are aware of their rights, but it’s often the case that self-employed people and small business owners lack the safety net of an employer’s benefits, such as sick pay. This means they risk having to rely instead on state benefits which can involve a lengthy application and wait, with no guarantee of any support."

"We recommend self-employed people speak to a professional financial adviser about whether they’d benefit from taking out private insurance, such as an income protection policy that will pay out if they couldn’t work because of accident, sickness or disability. However, it’s also vital the Government finds ways to support small businesses and entrepreneurs as they are a crucial part of the UK economy. We believe the new financial guidance body should have a specific responsibility to build financial resilience among UK households, particularly in the most vulnerable groups like the self-employed."


Notes to editors: 

The full ‘Income Roulette’ report will be published later this year.

*Sum: The Resolution Foundation reports there are 4.8 million self-employed workers in the UK (A tough gig? The nature of self-employment in 21st Century Britain and policy implications). 4.8 million x 41% = 1,968,000 unable to save

** Methodology for research: YouGov, on behalf of LV=, conducted online interviews with 9,495 UK adults between 5th and 10th July 2017. Data has been weighted to reflect a nationally representative audience. Among the research there were 676 respondents who are self-employed.


**** Association of Independent Professionals and the Self-Employed, A Contract with the Self-Employed


Definition of self-employed: within this context, LV=’s definition of ‘self-employed’ covers sole-traders, freelancers and micro businesses.

About LV=

LV= employs over 6,000 people and serves over 5.8 million customers with a range of financial products. We are the UK's largest friendly society and a leading financial mutual.

When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products.

We are currently the UK's number one brand for Insurance and Investments, according to the 2015 YouGov Brand Index Buzz Rankings.

We offer our services direct to consumers, as well as through IFAs and brokers, and through strategic partnerships with organisations such as ASDA, Nationwide Building Society and a range of trade unions.

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. LVFS is a member of the ABI, the AFM and ILAG. Registered address: County Gates, Bournemouth BH1 2NF.

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