Are you self-employed? Here is why you should invest in Term Life Insurance
Term Life Insurance is intended to fill the budgetary gap, considering the necessities of each person. Such as in case of the untimely demise of the sole earner of the family. Term Insurance is regarded as the best solution to provide financial security to your dependent family members. That is why experts recommend term insurance for everyone, be it independently employed or a salaried individual.
Talking about self-employed individuals, their family members are at a higher financial risk. Since the independently employed populace needs to manage business liabilities and other extra expenses like the salaries of their employees etc., they should have sufficient budgetary protection to support their family in challenging times. Hence, it becomes inevitable for them to have term insurance to protect their loved oned from uncertainties.
Why is Term Life Insurance crucial for self-employed people?
Not having a regular source of Income: Majority of the entrepreneurs or business visionaries invest their money to grow their businesses, compromising on their savings front. However, along with an effortlessly running business, it is equally vital for them to make proper arrangements to secure their family members in their absence. While they do ensure a financial backup, but it is essential to have an adequate one. Therefore, it becomes critical to have term insurance to provide a monetary cushion for their dependents so that they can smoothly sail during difficult times.
Obligations in Business: Along with household responsibilities, a self-employed person also has business liabilities at different stages to manage. For instance, if the business is at an underlying stage, you may have long haul liabilities like an advance to grow the company or working capital finance as well as other business costs. Thus, for a situation like this, it is imperative to have a term plan which guarantees your family will not be burdened with such enormous loans if disaster strikes.
How to choose the right one?
A self-employed person should remember these crucial points while purchasing term life insurance.
- Sufficient coverage amount: Before purchasing a term insurance plan, make sure that you, as a self-employed person, determine the adequate coverage amount in your term policy. The sum assured should be equal to your pending loans, liabilities and other expenses like marriage, children’s education, and your retirement.
- Duration of the term plan: If you are an entrepreneur, running your own business, then it is for sure that you will be working for more years than a salaried individual. Usually, a salaried person works until the age of 60-65 years. While a self-employed individual will work perhaps for another 10 years, therefore, it is necessary to look for such a term plan that covers you till the age you will be working.
- Tenure to pay premiums: Salaried people usually prefer to pay premiums regularly as they have a steady source of income. While in the case of self-employed professionals, they should pay off their premiums at the earliest. For doing so, they can opt for a limited premium payment term wherein the self-employed individuals can pay for the entire policy within a couple of years.
- Medical tests: While purchasing a term protection plan, make sure that you fill the application form with complete and right details about yourself. If required by the insurance provider, you should go for the medical test as this make insurer fully aware of your health status. And going forward, this step will likewise help your family to get the insurance claim settled when the need will arise.
- Financial declarations: This is one of the most vital pieces of the term insurance application process for the independently employed. And this is where numerous applications get rejected. Insurers needs to assure that the self-employed person has a source of income to pay the premiums of term life insurance. For this, the submission of Income Tax Return (ITR) is mandatory.
While there are various difficulties in running a business, but one can avoid the risk of unattended duties and liabilities for their family by taking a term insurance plan. Be it salaried or independently employed, everyone should invest in term insurance to secure their family from facing hurdles in their absence. To know about various term insurance policy offers, you can visit BimaKaro.in and get free quotes as per your needs from the top insurance companies in India.