The Gig Worker’s Guide to Insurance in the Age of COVID-19

Last updated on February 18, 2021

This piece was written by Jack Wolstenholm, head of content at Breeze, a digital-first insurance company that offers simple, affordable income protection for working Americans.

Since COVID-19 hit the United States in March, some gigs have proven to be relatively pandemic-proof. For example, many freelance graphic designers, software engineers, and digital marketers have been able to continue with business as usual, working safe and sound from the comfort of their homes.

Gig workers in other industries have not been as fortunate. While steady work for food delivery and rideshare drivers remains, they face the risk of exposure to COVID-19 on a daily basis. Meanwhile, event planners, performers, speakers, photographers — anyone whose work relies heavily on large social gatherings, really — have had to find ways to adapt and make money in these unprecedented times.

Regardless of the industry, most gig workers lack the essential benefits that come with traditional, full-time employment. To better protect themselves in the age of COVID-19, all gig workers should review their options for these four types of insurance coverage.

Disability insurance protects your income

While many healthy people show little to no symptoms of COVID-19, others can become very sick. Symptoms can persist for months. In addition, the virus can damage the lungs, heart, and brain. This can lead to long-term health problems that persist long after the virus has run its course.

Whether it’s from the virus itself or the after-effects, COVID-19 could make some gig workers too sick to work for an extended period. What would you do if you couldn’t work for several months or longer? How would you pay your bills and buy food and other necessities?

Fortunately, there’s disability insurance for individuals.

Disability insurance replaces the income you lose by not being able to work due to injury or illness. If you qualify for benefits, you will receive a monthly benefit based on your pre-disability income. Benefits will last as long as your policy states. For short-term disability policies, you may receive benefits for up to two years. Long-term disability insurance can pay for up to 10 years or until age 65.

If you earn income through gig work, insurers will review tax returns over a two to three-year period to determine your average annual income, then base your benefit on that amount.

Health insurance covers your healthcare needs

When it comes to health insurance, gig workers do not have the benefit of employer-sponsored coverage. Left to fend for themselves, many go uninsured, whether it’s because they can’t afford it or simply because they choose to avoid it. 

However, one of the many lessons coming out of the pandemic is the need for all individuals to have health insurance. Health insurance helps pay some or all of the cost of doctor visits, prescription drugs, hospital stays, and surgical procedures. The premiums you pay for health insurance are a tax-deductible expense.

The Affordable Care Act allows gig workers to find health insurance through the Individual Health Insurance Marketplace. What you pay for health insurance through the marketplace is based largely on your income; therefore you can find an affordable plan for your budget.

Critical illness insurance fills the gaps

As mentioned earlier, COVID-19 may lead to long-term damage to a person’s vital organs. The weakening of these organs may make a person susceptible in the years ahead to certain critical illnesses, just as heart disease or respiratory disorders.

Treating critical illnesses gets expensive. Even if a person has health insurance, many plans only cover 80 percent of those costs. The insured has to pay the remaining 20 percent out of pocket. If treating a heart attack carries a $100,000 bill, the insured would be stuck with a $20,000 bill.

Getting this type of bill can cause people to drain their savings or be forced to file for bankruptcy. To help gig workers avoid these astronomical medical bills, critical illness insurance can fill the gaps in your health insurance.

Critical illness insurance is a type of supplemental coverage that pays a one-time, lump-sum benefit if you are diagnosed with a covered illness. It can cover the cost of treating and recovering from heart attacks, strokes, cancer, and other costly conditions. Critical illness insurance can pay for costs not covered by health insurance, such as deductibles and out-of-pocket costs. You can also use the funds for travel expenses and your regular bills.

Term life insurance takes care of loved ones

Global pandemic or not, all gig workers should consider investing in a term life insurance policy. This is especially true if:

• You have health conditions that put you at a higher risk of COVID-19.
• You have people, such as a spouse and children, who depend on your income.
• You have debts such as private student loans, car payments, and credit cards.

Life insurance pays a death benefit to the beneficiaries of the policyholder following death. With term life insurance, the insurance company agrees to insure your life for a specified term, such as 10, 20, or 30 years. The shorter the term, the less you will pay in premium. 

If you pass away within the term of your policy, the insurance company will pay your named beneficiary(s) a death benefit.

Even if you are single, you may want to consider a term policy that pays a smaller death benefit, often referred to as final expense term insurance. It can cover the expenses that arise from your passing, such as your funeral arrangements and settling your estate.

Insure yourself for the future

Unlike managing your money, insurance doesn’t need to be reviewed as frequently once you find the right coverage. However, in today’s landscape, it’s better to err on the side of caution.

That being said, these four types of insurance are extremely valuable to gig workers even when there isn’t the threat of a pandemic. They can protect you in the event of major financial loss due to an unforeseen injury, illness, or death.

Because gig workers lack employer-sponsored benefits, it may be a challenge to find the funds for these priorities. But doing so will offer a better safety net when the next pandemic, recession, or personal crisis occurs.