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Can Term Insurance be Helpful for Self Employed? Know Benefits, Eligibility, Plan Details & More

term insurance

The desire to live life on one's own terms is one of the key motivators for people to pursue self-employment. However, while it provides a sense of ownership and responsibility and the potential for increased financial resources, it is also a risky undertaking compared to the security of a regular, fixed monthly pay check.

Self-employed business people, unlike salaried employees, do not have a set salary. A loan might be necessary to start the firm or expand it, and that debt would have to be repaid.

Repaying these loans while you're gone can be difficult for your family. But, even if you are no longer with your family, you can safeguard their financial future with a life insurance policy, particularly term insurance. So, in this article, we have jotted down a few aspects of insurance for self-employed people that will help you understand the importance of a term plan and how it can assist you in supporting your family in hardships.

Why should you Choose Insurance Plan for Self Employed?

Self-employed people face numerous hurdles in their life, choosing an insurance plan is one of them. Here are few obstacles they face while going for an insurance plan :


There are many different life insurance policies to choose from, each with its own level of complexity. However, a term plan, by definition, is simple: it secures the beneficiary by providing predetermined sum of money if the Life Insured dies within the policy's term.


A term plan's monthly premium is quite modest. The premium is determined by the individual's age, gender, and medical history and the sum assured opted. Premiums rise as you get older or live an unhealthier lifestyle. Term insurance is a cost-effective way for entrepreneurs to insure their families.

What insurance options should you look for if you are self-employed?

As a self-employed person, you are likely to have unique financial needs that paid workers do not share. Reputable insurers' term insurance plans can be tailored to meet any such requirement.

Life insurance premiums can be paid in a variety of ways

  • Single :You pay the entire premium at the time of purchase.

  • Regular :You pay the premium on a monthly or yearly basis for the duration of the policy.

  • Limited Pay : This option allows you to pay the premium for a set amount of time, but the life insurance coverage remains in effect for the duration of the policy.

Reason to Buy Self Employed Insurance

Here are a few reasons to buy insurance plans if you are self-employed :

Benefits Available to Employees Aren't Available

Benefits such as employee provident fund, health, and life insurance are unavailable to you, unlike employees in the organized sector. As the boss, you'll have to spend some money to provide some things for your family. You should also put money aside regularly for your retirement and other financial goals, such as your children's schooling and marriage. As a result, a term plan for self-employed people is required to cover few of these objectives if you cannot complete the investments due to a contingency.

Costs of Changing Ownership of a Business

If something occurs to you or you are unable to participate in the business actively, you should consider the expense of transferring ownership to the next generation. It may take some time for the new generation to catch up with business needs, requiring funds to continue operations. This would also include any loans or financial responsibilities you have in your firm regularly. For example, if you've taken out a loan to help with branding and business expansion, your term life insurance should also cover it after your demise. Sunder the prevailing tax regime.

With a single premium, you can get life insurance

The biggest feature of term insurance is acquiring 30 years of coverage for a single price payment. That means your family will be financially secure in the event of a disaster, regardless of business or market success.

Can Married Women Property Act (MWPA) assist you as a self-employed person?

You may need credit as a self-employed individual to expand your firm or cover any other financial deficiency. Your creditors may seek the proceeds from your term insurance as a reimbursement of your debts if such loans go unpaid while you are away. Under the MWPA, you can purchase a term insurance policy to protect your family from such a claim.

Term plans are thus perfect for people looking for the best insurance plan for self employed because they are cost-effective and hassle-free. Furthermore, it protects the policyholder against unforeseen events and adequately meets the demands of dependents.


*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.