Rethinking income protection for a complex workforce

Income protection remains an essential component of financial planning for working South Africans. However, while the need for comprehensive cover is constant, the nature of the workforce it serves has become increasingly fragmented and complex.

The shift to non-traditional employment

South Africa is seeing a definitive shift away from formal sector dominance. Roughly 3.7 million people now operate in the informal economy¹, and 16% of income-earning South Africans are self-employed². With the gig economy growing at 10% per year³, traditional employment is no longer the primary lens through which to view the workforce.

This shift has significant implications for income protection, which was historically designed for individuals with stable monthly earnings. Today, it is common for a client’s income to fluctuate from month to month, and the risk of losing their monthly income as a result of being unable to work due to injury or illness is increasingly borne by the individual rather than the institution. With many of these income earners operating outside of employer safety nets, sick leave, group risk benefits and disability cover are no longer guaranteed, making even short-term disruptions a threat to both personal liquidity and business viability.

Adapting to new realities

For advisers, this requires a more granular understanding of how clients earn, not just what they earn. Traditional life insurance models may exclude high-risk roles (such as oil rig workers) or fail to recognise the risks that temporary disability presents to homemakers and students. And some roles simply didn’t exist a few years ago – online fitness instructors and social media influencers, for example, are a new, yet thriving, addition to the workforce. 

Insights from Bidvest Life’s 2024 Claims Report indicate that injury and illness do not discriminate by occupation:

• Business owners were the top claimants for Comprehensive cover
• Fitness professionals led claims for Event-Based cover⁴.

Whether a client is a salaried executive or a sports coach, the risk of cancer, heart attack, or infection remains an unfortunate possibility. Providing income protection based solely on traditional employment models could deny millions of South Africans the ability to secure their livelihoods.

A growing opportunity for advisers

There is a clear opportunity here. Bidvest Life’s data shows that claims on Event-Based Cover as a share of all temporary disability benefits exceeded 10% for the first time in 2024. This confirms that more people in non-traditional occupations are successfully accessing the benefits of income protection.

The changing workforce does not reduce the need for income protection; it reshapes the strategy required to implement it. For a workforce defined by flexibility, having the right cover in place could transform a potential catastrophe into a more manageable event. Personally tailored advice ensures that, while the possibility of injury or illness cannot be removed, the financial impact of these conditions can be mitigated against. The more an adviser understands the nuances of non-traditional work, the better equipped they are to guide clients through this complexity.

¹Stats SA ² ²World Bank ³³Wage Indicator ⁴ Bidvest Life 2024 Claims Report