Finance Blog

Are Term Plans Important for Self-Employed Individuals?

Annually, thousands of people around the country join the workforce. Most of these individuals join corporate establishments that offer a fixed monthly salary. However, a large number of individuals are also self-employed. One of the main reasons why people go for self-employment is because they enjoy living life on their own terms.

Fulfilling one’s dreams and goals can bring a sense of responsibility, independence, fulfilment, satisfaction and adequate monetary support in an individual’s life. However, there are certain risks involved when one chooses to advance with these independent ventures. Hence, self-employed individuals should consider protecting the financial interests of their families with a life insurance plan.

Importance of getting a term plan as a self-employed person

Setting up a business may involve taking a loan. Self-employed people should consider the financial risks that their families might face in their absence. Along with this, any outstanding loans taken by the individual will also be charged to their beneficiaries or family members. For guaranteeing the safety of their loved ones, self-employed individuals must get a suitable term insurance plan for their family.

A pure term plan does not offer the policyholder any returns. However, if an individual is looking for returns from their plan, they can invest in term insurance with maturity benefit or a return of premium term plan.

Generally, employees working in well-established corporate firms have access to company-provided insurance covers. However, self-employed individuals do not have this privilege and will have to find a plan for themselves. It is advised that every self-employed individual plan to get the best life insurance to protect their families if something happens to them.

Why are term plans important for a self-employed individual?

As such, term plans are known to be flexible and can offer extensive insurance coverage at very affordable rates. A self-employed person can easily avail of a term plan’s protection without having to worry about the expenses of the insurance coverage.

  • Irregular income: As a business owner, freelancer or self-employed person, you cannot be sure of a steady monthly income. While being self-employed has its perks, the financial aspects can be disappointing. An unstable cash flow can eat into your savings, and often, it is difficult to make long-term financial plans when you are not sure about your income. With term insurance, you can at least be sure that your family does not have to bear financial hardships if something goes wrong. 
  • Business loans: Owners of new businesses often rely on capital loans to kickstart the operations and to sustain the company. Though a loan can be immensely helpful in these situations, it also makes the business owner vulnerable to financial risks. And in case of an unfortunate event, it would be the family members who would have to take up the burden of repaying these loans. This is another reason why term insurance can be the right choice for a self-employed individual. 
  • Dependent partner: A self-employed person’s finances may not always be enough to support more than one family member. Suppose a self-employed person has a dependent spouse, it means that two people need to manage their daily lives with a single and unstable source of income. While term insurance can be a great way to get financial coverage for yourself and your dependent spouse,  it could also be a good idea to get life insurance for the homemaker.

Conclusion

Self-employed individuals risk facing a wide range of challenges than salaried individuals, as they do not have the benefit of a stable income. In such cases, it is best to plan a term insurance policy for your family as soon as you start your independent career.

Comments are closed.