The Need For Life Insurance If You Are Self-Employed/Freelancer
Today, the self-employed and the freelancers are important for companies in reforming their work style. In recent years the freelance culture has seen a huge rise. As per the reports published by NASSCOM in 2020, there are more than 20 million freelancers or self-employed people in India.
The self-employed and the freelancers provide the same value to the companies a regular employee would provide. But despite the freelancers being critical for the company, they enjoy no traditional employee benefits like the regular employees. Thus, life insurance for self employed becomes essential.
Quitting the traditional 9 to 5 jobs and opting to explore the market as a freelancer or a self-employee sounds good. It provides you the opportunity to grow more, earn more, and work as per your comfort. However, freelancing for your self-employed business comes with many added risks.
For the regular employees of the company, there is the company to provide them some backing. But, for the freelance contractors and the self-employed, there is no company to take care of their families in case of any misfortune.
Understanding the Importance of Life Insurance for Self-Employed Individuals
To understand the need for life insurance for self employed we to understand their dynamics and needs. We all know that freelance opens the door for an individual to earn money without a boss putting pressure on them. It has benefits of freedom and time flexibility in the work but the nature of income could be irregular.
A freelancer will earn when he has some and the work depends on the needs of the market. Sometimes the earnings might be good but there could be dry patches in earnings for certain periods as the market will decide whether your work is needed. Apart from this, the individual will be solely responsible for all expenses. Managing the expenses and the work where the incomes are irregular puts the individual in a vulnerable position.
Why Self-Employed Individuals Require Life Insurance?
There are many financial risks associated with freelancing and the self-employed domain. Life insurance for self-employed becomes essential for various reasons. Here are some financial risks associated with freelancers and self-employed people.
Medical Emergencies
Medical Emergencies are some that can not be predicted. The regular employees of a company have the advantage of many employee benefits that provide financial assistance in case of medical emergencies. Medical emergencies could lead to substantial financial burdens that could ruin the monthly budgets. Besides this, if an employee is sick he can get paid leave but the freelancers taking a leave means no earnings for that day. Because of this insurance becomes essential for the freelancers.
No backups in case of mis happenings
A solo business is always a hazardous venture, operating it without any safety measures for unexpected mishappening can be a risky deal. It is a very common misconception among people that if they are earning goods they do not need to have any backup in terms of life insurance.
However, self-employment comes with its drawbacks as it doesn’t only leave the loved ones with no security cover in the absence of the person but also makes it very difficult for the family to sustain as the individuals with self-employment do not usually have that much savings.
How Life Insurance Safeguards Your Business and Loved Ones
Life insurance for self employed is not only important for individuals who work in freelancing but also is important for individuals who are sole business owners and want a safeguard for their families after their untimely death or any terminal illness.
Smooth Running of Business
There may be instances when an individual has suffered from a life-threatening condition because of which he/she can’t continue to run the business or in case of death it sometimes becomes very difficult for family members to continue the business without considering selling it.
In case your family members aren’t necessarily equipped to continue your business, it is wise to buy a life insurance policy that can cover the expenses covered in your business. Thus in this way the life insurance for self employed will easily give security to the family members and give money to continue their expenses and even children’s education, thus allowing the business to flourish in your absence.
Covering up Business debt and Loan Obligations
More often most of the business in the real world is sustained with some amount of debt and loans involved, without which it becomes difficult to sustain businesses. Thus in the case of loans incurred in running the business, they are usually backed up by the personal assets of the individual owner involved.
Thus, in the absence of any means to pay the loans it may leave your personal property and assets susceptible to being seized by loan givers. Thus, in these situations, it is very important to purchase life insurance so that in your absence your family can easily pay off the debts and doesn’t run the risk of becoming homeless and insolvent.
Furthermore, in some businesses, it may be that the business would be run in collaboration of a partner, or in the case of a sole proprietorship many businesses run by executing a buy or sell agreement.
These agreements are put in place to ensure that there could be a comfortable transition of business ownership. Thus, individuals who have these kinds of agreements in place urgently need to purchase a policy that can finance their families in such situations.
Types of Insurances suitable for freelancers and Self Employed Individuals
In terms of selecting the best self-employed life insurance it is mandatory that life insurance for self employed has the best coverage for you, and to analyze different kinds of insurance policies suitable for you and customize them in such a way that they can focus specifically focuses for your needs.
Term Life Insurance for self employed
Term life insurance policies are perhaps the most sought-after policy for individuals who are self-employed individuals and business owners. As far as this type of insurance is concerned this offers life insurance coverage through which individuals can avail all the services at a low rate but for a limited amount of time.
It also ensures that you can add different individuals as beneficiaries which can include your family members, children, and even maternity plans if you are not married and planning to marry in the future. For instance, through this policy individuals can typically opt for this insurance who are usually in their 20s or 30s as at that time the premiums taken will be low and the coverage time can range from 10 to 20 years.
It is essential to compare the best term life insurance companies before considering buying one so that you can get the best coverage.
Permanent Life Insurance for Self Employed
These types of life insurance policies are very beneficial for self-employed individuals or for individuals who are working as freelancers. This type of policy is like a whole life insurance which also comes with the death benefit which means the beneficiaries will get ample amount of coverage in terms of money or financial assistance upon their death.
Furthermore, these types of policies are not time limited which essentially means that they continue throughout the life of the individual and thus sometimes can be a bit expensive too.
However, since it is a long-term policy the coverage amount will be far more significant than a term life insurance policy which can easily be used to pay off loans or help the children with their studies.
Conclusion
Self-employment and Freelancing come with their inherent benefits which can always appeal to people in terms of means to make money. However, it is always essential to ensure the safety and well-being of loved ones in your absence and thus availing a life insurance plan is the best decision one can make. Furthermore, it is important to compare the policies so that you can get the best life insurance policy that is according to your needs.
