Working for yourself feels great. You are your own boss. You make your own schedule. No one tells you what to do.
But being self-employed also means no safety net. No company insurance. No retirement benefits. No medical coverage from the employer.
Everything falls on you, including protecting your family financially. This is where term insurance for self-employed becomes crucial.
Why Self-Employed People Need More Protection
Salaried people have some built-in security. Their company gives group insurance. They get EPF for retirement. Some lucky ones get medical insurance, too.
You get none of that. Zero. Your income depends entirely on your work. What happens if you cannot work anymore?
Your Income Stops Immediately
Does a salaried person die? The family gets some final settlement from the company. Maybe a few months’ salary. Sometimes, group insurance payout.
Self-employed person dies? Income stops that very day. Business might collapse. Clients leave. Money flow completely stops.
Your family faces an immediate financial crisis. Bills keep coming, but income has stopped. This is a scary reality.
Business Loans Add to Risk
Many self-employed people take business loans. Shop loan, equipment loan, working capital loan. These loans do not disappear when you die.
Banks will come after your family. They might force the sale of the house or other assets to recover the loan amount. Your family loses everything.
Term life insurance protects against this nightmare. The insurance money clears all business debts. Family does not inherit your financial mess.
No Employer Benefits to Fall Back On
Company employees get death benefits. Their family gets some money from the company policy. EPF balance gets released. Gratuity gets paid.
Self-employed? Nothing. Your family gets absolutely nothing from anywhere. Only what you personally arranged matters.
This makes term insurance for self-employed even more important than for salaried people.
How Much Coverage Do You Actually Need?
Do not guess this number. Calculate properly based on real needs.
Count Your Business Liabilities
Add up all business loans. Equipment loan, shop loan, working capital, vendor dues. What is the total?
Let us say 30 lakhs in business debts. Your term life insurance should cover this fully. These debts should not become a family burden.
Calculate Family Living Costs
Your family needs money for daily expenses. Food, rent, school fees, utilities. How much monthly?
Let us say 60,000 per month. That is 7.2 lakhs per year. For 15 years, they have needed over 1 crore just for basic living.
Add inflation. Costs will rise. So plan for at least 1.5 crores for living expenses.
Children’s Education Money
Education costs are brutal now. Each child needs 10 to 20 lakhs for decent education. Two kids? That is 40 lakhs minimum.
Your insurance should cover this completely. Kids’ education cannot stop because you are gone.
Add Everything Up
Business debts are 30 lakhs. Living expenses are 1.5 crores. Education is 40 lakhs. The total is 2.2 crores minimum.
This is why many self-employed people buy 2 to 3 crore coverage. Not showing off. Just realistic planning.
Special Challenges Self-Employed Face
Getting term life insurance for the self-employed has some unique hurdles. Know them beforehand.
Income Proof Issues
Insurance companies want income proof. Salaried people show salary slips. Simple.
Self-employed show what? ITR returns, yes. But many small business owners show lower income in the ITR to save tax.
Now you want 2 crore insurance, but your ITR shows only 5 lakh income? The company will question this. Be ready with proper documentation.
Medical Tests Are Stricter
Companies assume self-employed people work under more stress. Irregular lifestyle, erratic eating, and less sleep.
They might ask for extra medical tests. Blood sugar, cholesterol, ECG, and even TMT sometimes. Just cooperate and get them done.
Premium Payments Need Discipline
No monthly salary deduction option for you. You need to remember and pay the premium yourself.
Set reminders. Better yet, set up auto-debit from a bank account. Missing a premium payment lapses the policy. Your family loses protection.
Smart Tips for Self-Employed Buyers
- Buy early when starting out – Lock in lower premiums at a younger age, start with 50 lakhs and increase later as business grows.
- Show steady income growth – Last 2-3 years ITR should show consistent growth, because sudden jumps look suspicious to insurers.
- Keep business and personal finances separate – Proper accounts and clean records prove your income legitimacy.
- Get higher coverage than salaried peers – You have no EPF, gratuity, or company insurance, so buy 50% more coverage than colleagues earning similar amounts.
Tax Benefits Matter More for Self-Employed
Every rupee saved in tax helps your business. Term life insurance gives solid tax benefits.
Premium paid qualifies for Section 80C deduction. Up to 1.5 lakh premium reduces your taxable income. Good savings right there.
Death benefit to the family is tax-free under Section 10(10D). Your family gets full 2 crores without any tax deduction. Very helpful.
Take Action Now
Stop postponing. Every month you delay, you get older. Premium increases. Health risks increase.
You took the risk of working for yourself. Now take responsibility of protecting those who depend on you. Buy term life insurance. Do it this week.
