If you're self-employed, you know it comes with unique challenges, especially when finding affordable health insurance. But what about life insurance? Is it possible to get coverage if you don't have an employer-sponsored plan?
The good news is that it is possible to get life insurance if you're self-employed. Life insurance companies will typically consider your business income and size when determining your rates. And, if you have a family to provide for, life insurance can be an essential part of your financial security plan.
This post will explain how to get life insurance if you're self-employed. We'll also provide tips on getting the most affordable coverage.
Do Self-Employed Individuals Need Life Insurance?
Self-employed individuals in Corpus Christi require the same life insurance as full-time employees. A few of the reasons to obtain self-employed life insurance in Corpus Christi are:
Replacing income: If you're the primary breadwinner in your family, life insurance can help replace your income if you die unexpectedly. This is important if you have young children or a non-working spouse.
Taking good care of your small business loan: If you have a small business loan, life insurance can help pay off the debt if you die. This can be a huge burden lifted off of your family's shoulders. If you have a permanent life insurance policy with cash value, you may be able to borrow against it and use the funds for business expenses.
Repaying debt: Whether credit card debt, a mortgage, or student loans, life insurance can help your loved ones repay any debts you may leave behind. In addition, a life insurance policy can give you peace of mind knowing that your loved ones will not be burdened with your debt if you die.
Types of Life Insurance for the Self-Employed
When looking for life insurance as a self-employed individual, you have two main options: term life insurance and permanent life insurance.
Term Life Insurance
Term life insurance is an affordable type of life insurance. It provides coverage for 10, 20, or 30 years. If you die during the term of your policy, your beneficiaries will receive a death benefit. If you live past the term of your policy, your coverage will expire, and you will not receive a death benefit.
The most popular sort of term life insurance is level-term, as the premiums will not fluctuate on you, and self-employed income may be unpredictable.
Depending on your age, health, and the coverage amount you need, term life insurance rates can be very affordable. For example, a healthy 30-year-old male could get a 20-year, $500,000 level-term life insurance policy for around $30 per month.
Permanent Life Insurance
If you have financial obligations for a certain length of time, such as a 20-year mortgage or young children you're going to educate, term life insurance may be a wise option. On the other hand, permanent life insurance lasts a lifetime, which might be useful if your financial situation is a little more unpredictable.
Most people with permanent life insurance policies desire them for their tax advantages, which is why they are so popular. Also, the policy's savings (or “cash value”) component expands over time, making it appealing to investors.
A major advantage of a permanent life insurance policy is the ability to borrow against the cash value, which might be helpful when you have a business opportunity or problem. But unfortunately, a policy may take 15-20 years to grow enough cash to repay the loan.
Individuals who work for themselves may allow their cash value to rise without taking out any loans. Instead, they use the value of their assets in retirement to supplement their Social Security and any other retirement schemes they may be participating in.
Permanent life insurance rates are more expensive than term rates because the policy lasts a lifetime. For example, a healthy 30-year-old male could get a $500,000 whole life insurance policy for around $70 per month.
How Much Life Insurance Do You Need if You're Self-Employed?
The first issue most self-employed individuals confront when purchasing a standalone life insurance policy in Harlingen, TX, is how much coverage to select. A good rule of thumb is to aim for 7 to 10 times your yearly net revenue, but this may not be easy if you start as a solo entrepreneur. However, it may help to break it down by looking at your specific obligations and liabilities.
The simplest approach to figure out how much life insurance you'll need is to use a term life insurance calculator. To obtain an estimated coverage amount suited for your needs, you must fill in a few details about your family, income, and debt obligations.
Choosing the Finest Life Insurance Alternative For You
Your requirements and income will determine the best life insurance policy in Brownsville. Self-employed individuals may benefit the most from term life insurance. It is generally the least expensive form of life insurance for self-employed people. In addition, the premiums stay the same with level-term life insurance, making it easier to budget even if your income changes.
If you like your life insurance policy to last your whole life, you could prefer permanent life insurance.
How to Purchase Life Insurance as a Self-Employed Individual
Once you know how much coverage you'll need, it's time to shop for a policy. The procedure is brief and simple, and it may be finished from the comfort of your home by following these procedures.
- Gather paperwork to verify residency, age, identity, and income.
- Contact a representative or go online to get quotes and compare options for multiple coverage amounts and types to obtain a life insurance policy.
- Fill out an application and respond to questions about health, lifestyle, and work history, as needed.
- Schedule a paramedical exam if the life insurance company you've selected requests one.
- Pay premiums and start coverage.
Is Life Insurance Tax-Deductible if You're Self-Employed?
Life insurance premiums are not tax-deductible if you're self-employed, just like health insurance premiums and other continuous business expenditures. There are, however, several exceptions.
If you're a sole proprietor, LLC, or S corporation and provide your employee's life insurance as part of a compensation package, you may deduct premium payments from your income tax. However, this does not apply to sole proprietors with no employees.
The good news is that while premiums may not be deductible, your loved ones' death benefit is almost always tax-free.
In Conclusion
For self-employed individuals, life insurance can be a key part of a well-rounded financial strategy. It provides peace of mind, protects loved ones, and can be used to help fund business continuity in the event of your death. When choosing a life insurance policy, working with an experienced life insurance company agent who understands your unique needs as a self-employed individual is essential.
A professional agent can help you determine how much coverage you need and find the most suitable policy for your needs and budget.
