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Have you insured your side hustle?

It may not be obvious, or easy, but it is possible.
Being able to provide proof of secondary income is key, and the insurers themselves need to be more flexible in this regard. Image: Shutterstock

A study by the Henley Business School of Africa earlier this year found that almost a third of working South Africans are earning an income from something apart from their main employment. 

According to the analysis – What is the future of work in South Africa: Examining the ‘side hustle’ economy – side hustling allows people the security of multiple streams of income, as well as the ability to pursue a different passion or business idea.

Of the 1 096 employed South Africans surveyed, 247 (22.5%) had a side hustle – a second job not in the same industry as their main employment.

A further 71 (6.5%) had a side job – defined as other work in the same field.

This is a trend that is being observed all over the world. According to Henley Business School, similar studies in a number of countries have found that 35-45% of employed individuals have more than one source of income.

A shifting environment

Far from being a distraction from their main occupation, however, the study found that these side hustlers and side jobbers are far harder working than their colleagues. On average, they work 53 hours a week on their main jobs, compared to 43 hours a week for those with only only one occupation.

Overall, apart from the flexibility and financial security this affords them, their positive contribution to the economy is significant.

“They employ people, some many more than one person,” the study reports. “They upskill themselves at their own expense, they become less dependent on the company for those all-important annual cost-of-living expenses or life-changing career pathing because they have literally taken control of their own destinies. And they’re making it work: side jobbers are supplementing their monthly income by up to a quarter, while side hustlers are earning up to 20% more.”

This has profound implications for businesses in South Africa, which need to consider how they can benefit from supporting more flexibility for their employees. If those with side hustles or side jobs are more productive, then it makes sense for companies to want to attract them by encouraging, rather than stifling, their entrepreneurial efforts.

Planning ahead

These side hustlers and side jobbers also have to think about what it means in terms of how they manage their finances. If their secondary income is significant they would be reliant on it to maintain their standard of living.

Unfortunately, like many entrepreneurs, they may neglect to consider the importance of insuring it.

Even if they have taken out income protection on their main income, their side hustle might not have received the same consideration.

Read: Are you protecting your most valuable asset?

This may not, however, be entirely due to their own oversight. Traditional insurance products are not designed to consider more than a single source of income, and insuring a secondary income is neither obvious nor easy.

The shifting work environment, therefore, requires that insurers also show a bit more flexibility. 

“The world of work has changed quite a bit,” says Kresantha Pillay, lead specialist for lifestyle protector at Liberty Group. “People have multiple jobs and the interconnectivity of things means you don’t have to be present at a particular job. So we have had to think critically about whether the income protection that has been around for a long time is still appropriate for our clients.”

Two in one

In Liberty’s case, the conclusion is that it isn’t. The company has therefore introduced a first-of-its-kind product in South Africa that covers two occupations under one policy.

“The second income needs to be significant enough that it would have a real impact – so it needs to be 20% or more of the total,” Pillay explains. “But it could be as much as a 50/50 split.”

This allows individuals to take out income protection over both their main and secondary incomes, thereby fully protecting themselves if they were to become disabled.

As with their main employment, however, they must be able to show proof of income. This would be in the form of an income tax return.

“A salaried employee can show us a salary slip, but you don’t get that with your side hustle,” says Pillay. “So, for now, we have to rely on you disclosing it to Sars [the South African Revenue Service]. This may evolve. If we find that there are other ways of efficiently proving your income, we could look at other ways of doing it.”

Being able to verify this income is not just important for the insurer, but protects the individual as well.

“We need to ensure that you are not over-insured,” Pillay explains. “You don’t want to pay for a benefit and then at claim stage find that you can’t verify what you earn.”

Given the changing work environment, these are the kinds of innovations that insurers will have to offer to ensure that they are meeting people’s real needs.

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COMMENTS   6

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Oh look. They’re trying to sell us insurance.

Hehe…oh Patrick…. your article…so cunning

Like the proverbial Trojan Horse, in reality this is just a masked tactic to get all those ppl scraping a living on the side to declare it all to SARS

So that SARS can then empty more of these hard working peoples pockets and fill the gap caused by governments unabated looting and corruption

Rinse.Repeat

Never ever and especially ever trust anything from Liberty

Nor any other insurance salespersons. Ever.

Second that!

And I thought my main hustle was insurance for my side hustle and vice versa….if the powers that be want some of that money though, why not just ask nicely instead of trying to sell me insurance 🙂

End of comments.

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