Why "I'll Just Rely on My Savings" is the Most Expensive Mistake a Freelancer Can Make
Speak to An ExpertCustomers love us! Don't take our word for it. Check out what some of them have to say...
Why “I’ll Just Rely on My Savings” is the Most Expensive Mistake a Freelancer Can Make
When discussing Personal Protection, contractors and freelancers often raise the same objections. It is natural to want to avoid thinking about worst-case scenarios, but ignoring the risks doesn’t make them disappear.
Here, we address the most common reasons independent professionals delay getting cover, and why those delays can be financially devastating.
Objection 1: "I'll just rely on my savings if I get sick."
It is fantastic if you have built up a healthy savings buffer. However, savings are designed for investments, holidays, or tax bills — not to slowly drain away paying your mortgage while you recover from an illness. In 2024, UK workers lost an average of 4.4 days to sickness, but a serious illness can mean months or years off work. If you were unable to work for 12 months, how quickly would your savings vanish? Income Protection ensures you receive a regular wage while you recover, protecting your hard-earned savings from being wiped out by a health crisis.
Objection 2: "I'm young, healthy, and single. I don't need insurance."
This is a common misconception. While you may not need life insurance if you have no dependents, you absolutely need Executive Income Protection. If you are single, you don't have a partner's income to fall back on if you suffer an injury or illness; you are your only safety net. Furthermore, taking out cover while you are young and healthy means you lock in significantly cheaper premiums for the life of the policy. In 2024, the average critical illness payout in the UK was £70,898, and 34% of Income Protection claims were due to musculoskeletal issues, common among both manual and desk-based professionals.
Objection 3: "Can't I just invest the premium money instead?"
Investing is crucial for long-term wealth, but it is not a substitute for insurance. If you invest £50 a month and suffer a critical illness next year, your investment pot will be practically empty. If you put that £50 into Critical Illness Cover, you could receive a tax-free lump sum of £100,000 or more immediately upon diagnosis, giving you the cash injection you actually need. In 2023, over 91% of critical illness claims were paid out by leading UK insurers.
Objection 4: "I get cover through my umbrella company."
Some umbrella companies offer a basic level of group life or income protection. However, this cover is often minimal and strictly tied to your employment with that specific umbrella. If you change contracts, switch umbrellas, or go limited, you lose the cover entirely. A personal policy arranged through Broadbench moves with you, providing comprehensive, portable protection regardless of how your IR35 status changes.
Objection 5: "I have a will, so my family is sorted."
A will dictates who gets your assets; it doesn't create the cash needed to pay off the mortgage or replace your lost income. Furthermore, assets tied up in probate can take months to release. A life insurance policy written in trust bypasses probate entirely, delivering a tax-free lump sum to your family within weeks, providing immediate financial relief when they need it most.
Case Studies
Speak to a Broadbench Specialist
Don’t let misconceptions leave you exposed.
Speak to a Broadbench adviser for clear, jargon-free guidance on protecting your income and your business.
FAQs
Why do we need insurance?
Insurance plans are beneficial to anyone looking to protect their family, assets/ property, and themselves from financial risk/ losses: Insurance plans will help you pay for medical emergencies, hospitalisation, contraction of any illnesses and treatment, and medical care required in the future.
How can insurance companies afford to provide large settlements to the policyholders?
The insurance company collects the premium amount for multiple policyholders and invests the fund securely to accumulate over time and pay out the policyholder when they claim.
Why should I use you instead of doing it myself online?
If you are looking for a quick quote, you aren’t in the right place! The reason for that is that a ‘quick quote’ is rarely a good fit for what you need. A typical person takes a guesstimate at the amount of cover they need and is led primarily by the monthly premium, rather than ensuring that the policy actually solves the problem they need it to. An advisor is an expert in their field and works hard to understand who you are and your lifestyle so that the policies you take out truly protect you, and at a cost that suits your budget.
Do business owners, professional or contractors need insurance?
Being a contractor carries certain obligations and legal responsibilities. You have a financial responsibility to your client for errors that you make. Although claims against contractors are rare, they do happen, and the claims can be very high! Having insurance cover fully protects you and provides you with peace of mind.
I’m new to contracting and want to replace my death in service/employee benefits, what are my options?
This is exactly where we can help! Now you are self-employed, it’s important to ensure you, your business and your loved ones are protected in every eventuality. That could include Income Protection, Critical Illness Cover, Life Insurance, Private Healthcare and Pensions.
As a self-employed/limited company business what types of Insurance coverage are compulsory?
It is advisable to consider all elements of insurance to protect you from a variety of risks within your market. If you employ any staff, you are required by law to have Employers’ Liability Insurance.
The only exemptions are limited companies where the owner is the sole employee and unincorporated family businesses where all employees are closely related. Professional Indemnity and Public Liability are often required by your customers under contract.
What insurance policies does an average contractor take out?
While protection and insurance products are personal, and everyone’s circumstances are different, there are a handful of core products that we see our contractor clients taking out. These include Life Insurance and, specifically, tax-efficient Relevant Life Insurance – which ensures your loved ones are financially protected in the event of your death. Alongside this is Critical Illness Insurance – protecting yourself and your family if you are ill and no longer able to work and earn. Finally, Indemnity Insurance protects your business against any claims made against you.
It’s important to note the value of working with an expert protection adviser firm like Broadbench. We’ll take the time to listen to who you are, and your unique circumstances before designing a protection package that protects exactly what you need it to.
Ready to protect what matters most?
Fill out the form below to arrange a time to speak to a Broadbench adviser who specialises in business and personal protection for freelancers.