None of us know what the future holds, and these days, the concept of the “job for life,” which our parents or grandparents might have taken for granted is a thing of the past. Benjamin Franklin, a man never short of a soundbite, told us that the only certainties in life are death and taxes, but even if you work for an undertaker or the IRS, life can throw up some unpleasant surprises at the most inopportune moments.
Thousands of Americans find themselves suddenly out of work due to retrenchment, illness or injury each year. The truth is, it can strike anyone in any sector at any time. To borrow another of Franklin’s best-known idioms, if you fail to prepare, you prepare to fail.
In the modern age, where more of us are self-employed than ever, there is no convenient employee scheme to fall back on – so what precautions do you have in place to be ready for the slings and arrows of outrageous fortune?
Speak to your bank
You almost certainly have some payments that come out of your account every month, for rent, mortgage, utilities, insurance, and numerous other things. If you find yourself suddenly unable to generate income, for whatever reason, the well will soon run dry.
It might sound crazy from the comfortable position of anyone who’s not been there, but it is oh, so tempting to stick your head in the sand and just let it happen; that is a very bad idea. Aside from risking losing your home or getting your power disconnected, it will also have a massive impact on your credit score, making a difficult situation even worse.
The sooner you speak to the bank, the better chance there is it will be able to do something about it, such as offer you a payment holiday on some charges.
Make sure you also take some independent advice. Some offers that are supposed to help can end up being nothing but an additional drain on your resources, at the worst possible time. The famous payment protection insurance scandal is a case in point, and today, there is still the possibility to place a PPI claim if you feel you might have been a victim.
Workers’ Comp
If you are in employment and you suffer injury or illness through the course of your work, you are entitled to put in a claim for workers’ compensation. Essentially, this provides wage replacement and covers the cost of medical care, but there are a couple of points that you need to bear in mind if you go down this route:
- Putting in a workers’ comp claim will usually involve the mandatory relinquishment of your right to file a negligence claim against your employer. You do, therefore, need to think carefully about the circumstances giving rise to the injury or illness before you proceed, and should take independent legal advice.
- If you are a sole proprietor or a freelancer, you are legally considered to be self-employed, meaning you are not automatically covered by workers’ comp, even if the problem arose as a result of the actions or inactions of a company for which you were providing services. Here, it is vital that you speak to your legal advisor, as there are numerous occasions when the boundary between employees and independent contractors can be blurred.
As a self-employed entrepreneur, you can take out your own workers’ comp policy. Shop around to get the best deal. Many of the large funds are only interested in covering major companies, so you might be better speaking to a local independent broker. Also look into state funds such as the Workers Compensation Trust Fund in Massachusetts and the State Compensation Insurance Fund in California.
Be prepared
Illness, injury or some other event that prevents our ability to earn is something that can happen to any of us. It is never an easy thing to go through, but it becomes twice as difficult if you also have the stress of not knowing where to turn or what options are available.
It is well worth spending an afternoon getting to grips with what is available for you and ensuring you are clear in your mind as to what to do and where to turn, just in case the worst should happen. After all, Benjamin Franklin is one of the most quoted men in American history, and he certainly knew what he was talking about.