Blog > Why Life Insurance is Important for the Self-Employed

Why Life Insurance is Important for the Self-Employed

If you work for yourself, you’ve achieved the dream of millions of people. You have the freedom to drive growth the way you want to without the parameters imposed by working for another company. Of course, as a self-employed individual, you have to accept that both you and your bank account are vulnerable every day. 

You don’t have the safety nets that are typically offered by traditional employment. One of the most important of these safety nets is life insurance. The reality is that people depend on you and your business, making your family and your employees vulnerable to the same risks that you are. If you work for yourself, you need vehicle insurance, property and casualty insurance, and health insurance. You purchase this coverage because you don’t want to face financial ruin due to an unexpected event. 

What about life insurance? It’s vital that you protect your loved ones and your business if you can’t be there to do it for them. Life insurance can keep your business running or replace your income if the company can no longer operate without your leadership.

When you’re ready to discuss life insurance to safeguard your business and your family, call the friendly, knowledgeable agents at YourPolicy. We’ll guide you through the process, save you time and money, and find the best solution for your needs. 

Still not convinced? Let’s examine a few of the reasons why life insurance is necessary for you and your business.

Why Life Insurance is Important for the Self Employed

You Want Your Business to Continue Without You

Perhaps you don’t want your family to have to quickly sell your business because they aren’t equipped to run it. Life insurance will provide them with an income that will give them the time to hire the right people to operate and manage the business.

Your Business Loan May be Backed by Personal Assets 

Business loans are often secured with personal assets as collateral. In the case of a default, the lender can seize that collateral and use it to repay the loan. If you used your house as collateral, you want your family to have sufficient insurance to cover the debt so that they don’t lose their home.

You May Have a Buy and Sell Agreement 

A buy and sell agreement is commonly used by sole proprietorships, partnerships, and closed corporations in an attempt to streamline the transition in ownership upon the death or retirement of a partner. If you have this type of agreement, your family will need the finances to fund it in order to sell the business.

Selecting the Right Coverage

Fortunately, life insurance is highly customizable and doesn’t have to specifically focus on your passing. It can be beneficial during your life, providing you with security in your later years.

Term Insurance

Term insurance is popular with self-employed individuals. It’s straightforward and easy to understand. As the name suggests, it is good for a certain period of time (a term). It is simply the promise of a death benefit for your beneficiary. Term insurance is more affordable in the beginning. For example, if you get a policy in your 20s or 30s your premiums will be low-priced.

However, if the “term” ends in 30 years, and you wish to renew, you’ll be paying the premiums of a 50- or 60-year-old. In a nutshell, it is much less expensive than life, but there are no benefits at the end of the policy. It’s a good fit for a family that wants a large amount of insurance for relatively small premiums. As someone who is self-employed, you may want to go in a different direction.

Permanent Insurance

Unlike term life insurance, permanent insurance lasts the lifetime of the insured. Only non-payment of premiums would cause the policy to lapse. This type of policy has a death benefit for the beneficiary but also provides for wealth accumulation. For this reason, permanent life insurance coverage is more expensive than term coverage, but the premiums don’t change – you pay the same amount no matter your age. 

As your policy builds cash value over time, you can borrow funds from it or withdraw cash outright to cover unforeseen expenses. When you pass, the loan is paid with your death benefit, which has continued to accrue value over time. Because permanent life insurance is more complicated than term coverage, the best thing to do is speak with an agent at YourPolicy for a detailed explanation.

Summary

You certainly can’t put a price on the advantages of being your own boss. Equally important, however, is protecting and providing for your family when you can’t. Your solution is life insurance. Call one of the skilled agents at YourPolicy to discuss the different types of life insurance that would best fit for your needs as a business owner. They know how to save you time and money while protecting your family’s financial security.