Health insurance for freelancers

Health Insurance for Freelancers: Why you Must Invest?

Health Insurance for Freelancers: COVID-19 has brought about a refreshing change in the way a company’s mindset in the way they operate. Today, employers no longer require their workforce to work out of the office. With the hybrid working model, employers have adapted permanent work from the home model too and even cut down on permanent employee costs and hired freelancers and gig workers instead.  

According to The Associated Chambers of Commerce and Industry, ASSOCHAM, India’s gig economy is expected to grow to $455 billion by 2024 at a compounded annual growth rate of 17%, with the potential to grow at least double the pre-estimates for the post-Covid-19 period. 

By 2025 India is likely to have 315 million gig worker jobs. 

A gig worker or freelancer can be defined as a person who is not hired by the company on a full-time basis, but only for a specific period to fulfil a specific business requirement. This may include operations executives, content writers, digital marketers, consultants, etc.  

Gig workers or freelancers do not get access to a fixed salary amount per month and do not enjoy several other benefits enjoyed by permanent employees. Gig workers and freelancers are often deprived of perks like provident funds, access to life insurance, health insurance, wellness benefits, etc.  

As per a NITI Aayog report titled, ‘India’s Booming Gig and Platform Economy’, it is estimated that gig workers will form a total of 4.1% of the workforce in India by FY30 from the existing 1.5%. Today organizations are keen on hiring gig workers instead of investing in a full-time employees.  

Potential demand from the gig economy 

Boston Consulting Group in its report, titled, ‘Unlocking the Potential of Gig Economy in India’ notes the below –  

  • In the non-farm sector of India which constitutes to be around 30%, the gig economy has the potential to serve up to 90 million jobs in this sector. The potential adds up to 1.25% to India’s GDP through efficiency and productivity gains.  
  • The majority of gig workers are employed in the field of construction, manufacturing, logistics, transportation and personal service sectors driven by MSME and households. 
  • In the short-medium term, nearly 24 million jobs in skilled, semi-skilled and shared services roles could be delivered via gig, including nearly 3 million shared services roles and around 8.5 million roles meeting household demand. 

The necessity of health insurance for freelancers and gig workers 

  • With irregular cash flows, freelancers and gig workers face a lot of financial insecurity 
  • Standard freelancer and gig worker contracts do not provide any insurance coverage  
  • Lack of financial literacy and awareness about insurance is among one the primary reasons  

Boston Consulting Group in its report also stated that  

  • Gig workers prioritised the need for higher earnings and flexible work hours, apart from other driving factors like personal development and salary increments which are not a high priority 
  • 1 in 4 gig workers takes up gig jobs to fund additional household expenses such as medical emergencies, household events, paying off rent, etc. 
  • For gig workers, non-monetary benefits like medical and life insurance are not of prime importance 

However, looking at the growth of this industry and the important role of gig workers in an organization, it is important to extend health and life benefits to them. 

As a business owner, you can decide on extending life and health insurance benefits to freelancers  to help them manage their financial needs and deal with uncertain situations. 

Extending a range of wellness and health benefits to freelancers and gig workers will keep them motivated, increase their productivity, ensure continuity of work from their end, and give them a sense of assurance that they are working for a company which cares for its employee’s health and well-being. 

A good way to calculate coverage for life and health insurance for freelancers is to take into consideration the rising medical costs, their age and their yearly income. For calculating life insurance cover amount, human life value should be measured which is basically the present value of future liabilities, income and expenses.  

How dose life and health insurance for freelancer help?

Provides financial security: Unlike permanent employees, gig workers do not have a permanent source of income, and this translates to financial insecurity. Hence, it is important to safeguard them against financial emergencies related to health and their life, especially if they are working in hazardous environments which pose a risk to their lives. Health insurance for freelancers provides coverage against hospitalization expenses, and hence, in the case of regular gigs and assignments, medical expenses for self or dependents are covered. Whereas a life insurance policy in case of an unfortunate event like death or disability of the gig worker, the policy compensates the family of the worker. 

Workplace injury 

In India, where delivery under 20-minutes is gaining prominence, a workplace injury cannot be ruled out. In the absence of a stipulated contractual agreement between the organization and the gig worker, the risks lie solely on the shoulders of the worker, and not the employer, unlike the traditional workplace scenario. Since most gig workers use their own equipment, vehicles and workspace, it is important that all these elements including the self are insured in case of fire, theft, or accidents. In absence of corporate protection for a person’s life and health, insurance becomes a bare necessity. 

BCG notes that workplace hazard coverage for workers in construction and manufacturing industries will be important to ensure similar levels of coverage as traditional employees.  

Way forward 

Employers are increasingly understanding the need to protect freelancers and today employee healthcare and lifecare memberships extend coverage to this workforce at an affordable cost starting at Rs.145/month* offering health insurance for freelancers, life cover and wellness benefits. While the gig workforce is here to stay and grow, by establishing insurance as a social security tool, India will be prepared to unlock the sector’s prospects in the near future.