Life insurance for the self-employed

Congratulations. You’ve finally decided to break out and be your own boss. You’ve got the company registered. You’ve got the office sorted, name cards, website, tax. You’ve even started getting some work. What about insurance?

That’s right. Many self-employed individuals forget to consider life insurance when they start their businesses. In all the flurry of getting the business going – starting up, taking off and just plain operating – the matter of insurance is often pushed to the bottom of the list when it in fact could save you a whole lot of cash.

As every business person knows, things don’t always go according to plan and this is the very reason why self-employed individuals need life insurance. Perhaps even more so than if you were an employee. When you are your own boss, everything depends on you. You can never predict what will happen so it’s good to have a safety net for the unforeseen.

 The advantages of life insurance

Protect your family

Being your own boss means your earnings are now unlimited. It’s all up to you. The more you put in, the more you will reap. But the downside is, everything really does depend on you. You are your business and should anything happen to you, your dependents will suffer.

Just like individuals in employment, self-employed people need life insurance to protect their loved ones in circumstances where they may not be able to provide for their families. In a self-employed person’s case, this would be in times of sickness or injury, an even more crucial factor if you are self-employed.

While an employee may claim sick leave and get covered by the company, a self-employed person who is sick may face damaging circumstances to his or her business. In many cases, if you can’t work, you won’t be able to earn anything.

Having an insurance policy that covers injury and sickness will help you in precisely these times.If you are unwell or have been injured, your family members can continue to receive financial benefits even when you are unable to go to work.

 Peace of mind

Every business is a risk. 99% of start-ups fail. But that doesn’t mean you don’t try. Having an insurance policy means you can go ahead and start your business without having to worry about the financial repercussions on your family. Having an insurance policy means your family is taken care of whatever happens and in business you can never predict what will happen – but you can be prepared.

Coverage beyond the business

Many self-employed individuals take life insurance simply because it’s a smart choice. Life insurance for businesses cover a whole range of costs which go far beyond daily business operations depending on the life insurance you take. They can cover children’s education, mortgages, rental payments, family bills, clothing and other business-related costs which may need to be covered should your business be impeded. Just because you are self-employed, doesn’t mean your family cannot enjoy the security of an employed person.


Challenges for the self-employed

So it makes sense to get life insurance if you’re running your own shop. But the catch is, it’s not cheap, not compared to being an employee. Self-employed people get charged higher premiums because they can’t take advantage of the group discounts afforded to big companies. As an employee you get to choose insurance policies at a discount because your employer has special deals with the insurance companies.

As a self-employed individual, you will also face higher costs simply because the chances of you terminating your policy is higher. Many self-employed people suddenly decide to go back to employment. Also, there is the possibility that you may not be able to pay the premiums due to financial constraints or potential debt issues. Insurance companies take all this into consideration and thus charge higher premiums.

The type of work you do will also affect your insurance cost. Riskier professions will obviously be charged higher insurance premiums. A construction worker who works on site, for example, will face higher costs than a writer who works in an office.

 How to find the best policy

Go to a review site

Step one. Go to an insurance review site which lists out all the different policies and companies available.  Get a feel of the different types of life insurance available – and there are many out there.

The main ones are life insurance cover, income protection, total and permanent disability and trauma cover. Consider all factors: your future needs, your dependents, your business nature, and have a rough idea of what you need.

Choose an insurer with a proven track record

There are many insurance companies out there but the best thing to do is to choose an insurer that has proven results and that has been around for a long time. These insurers usually have a wide variety of options for you to choose from and can offer packages which are customised exclusively for your needs.

Choose an insurer that specialises in your field

 While some insurance companies may be well-known in one field, they may not know much about another field. Some insurance companies are also generalists and may be something your mother uses, but may not be so suitable for the nature of your business.

Insurance companies do specialise. So look for one that specialises in your specific field, whether you’re in hospitality, construction, real estate or medicine.

Shop around

Finally, the best strategy is to shop around. You never know what new insurance company or promotion will come up and what your friend is doing may not be ideal for you. You can start by getting an online quote, then compare it with other quotes you get from TV advertisements or from other agents you’ve met.

What works for one person may not work for another so keep in mind your individual goals, objectives and financial circumstances. At the end of the day, you want a plan that will not just benefit but be accessible to you and your dependents when you need it most.




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Income Protection  Life Insurance