Income protection – Should you choose traditional or Peer-to-peer insurance?

29.07.2020

Income protection is an excellent option for anyone looking to protect their way of life. If you don’t have it, it’s time you started thinking about it. Nobody expects to have an accident or get ill, but if the worst happens, an income protection policy will give you a monthly payment until you’re back on your feet. Recently Peer-to-Peer insurance firms have challenged the traditional model of income protection insurance. So which one is better? In today’s blog post, we’re comparing the two.

Traditional Insurance

The traditional model of income protection insurance is relatively straightforward to understand. It works similarly to other insurance products you may have, such as car or home insurance. The insurance company will take details of your employer and medical history, and once you’ve agreed on a monthly premium, coverage can start.

If you fall ill while the policy is in place and are unable to work, then the insurance company will pay you a monthly wage while you’re off sick. Usually, this is between 60-80 percent of your salary. 

Premium costs can be high and vary greatly depending on your age, profession, and lifestyle. Income protection for construction workers will be higher than for office workers, as construction workers have a high risk of injury. 

If you work full-time and get a regular monthly salary, you should be eligible for income protection. Freelancers usually find it harder to get income protection as insurance companies view them as risky, where policies are available costs tend to be higher. This is why peer-to-peer insurance is often a better option for freelancers.

Peer-to-peer (P2P) insurance for freelancers

With the rise of the gig economy, and more people in America and Europe working in flexible industries, freelancers tend to have networks. Even though freelancers may do most or even all of their work through a single company, like Uber, every driver is their own boss. 

Individually these workers may find that traditional insurance is hard to get due to their freelance status. At VouchForMe, we feel that this is unfair. Many self-employed people have decent salaries and work just as many hours as other employees, so they deserve access to the same security that regularly employed people get. 

VouchForMe Income Protection

With P2P insurance, such as VouchForMe’s income protection, these individuals can make use of those networks to protect their lifestyles. While individually, they would struggle to get insurance, they can protect themselves and each other, by signing up together for VouchForMe’s income protection. Instead of shelling out for a monthly premium, each month, group members pay into a pot. Should one member of the group fall ill, they receive a monthly payout from the pot, until they’re ready to get back on their feet. So it’s not the insurance company that protects you, it’s your network.

With P2P insurance with VouchForMe, you’re in control of the money that you put in the pot. You decide how much you want to contribute monthly, and the money remains yours on your bank account. So if you leave, you simply take it with you, minus any fees marked for payouts to other group members. 

P2P income protection is a great option for freelancers, so if you’re in a group and are hoping to protect your way of life, check us out here.

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