Becoming your boss, becoming an entrepreneur, or creating a company all seem very appealing, as long as you are prepared for the financial ups and downs that come with the territory. Your finances are vulnerable to market changes, and both losses and profits are equally likely. Under such circumstances, one of the most important things you want to protect is your loved ones’ financial safety and stability, and term insurance policies can be a terrific way to do so if you are not present. Freelancers may experience long periods of continuous financial stress that can deplete their savings and put them in a precarious financial position. In this article, we will be examining why it is important for self-employed or freelancers to acquire term insurance for the self employed to secure their family and children in case of their unfortunate demise during the policy term. The following are four primary reasons why freelancers should invest in term insurance for self employed:
- Unstable source of income: Professionals working with a company know the amount of money they will get in their bank account, independent contractors, business owners, and other self-employed people do not have a guaranteed source of income. Due to this, freelancers cannot plan their expenses in advance and these inconsistent financial flows frequently exhaust their savings. Purchasing term insurance for self employed gives their family members financial security and keeps them from having to take on large debt in the event of an emergency in their absence.
- Working capital loans: When a company lacks capital, it can face difficulties such as not being able to pay its debts on time, which makes its shortcomings more apparent. Business owners must look for financial support in the form of working capital loans in order to cover up the revenue loss. Term insurance for self employed is strongly advised in order to reduce the likelihood that their family would be exposed to the risk of such financial obligations in the future.
- Loss of a key employee: Choosing a term plan is essential for a business owner to maintain the organization’s viability and, in the event difficulties arise, to help it bounce back. A significant employee’s sudden death could put a financial burden on the company. Through the sum assured covered by the plan, the organization can recover such financial loss with the aid of a term insurance plan.
- Dependent spouse: If a self-employed person has a dependent spouse, getting term insurance for self employed becomes even more crucial. In cases, where you think if the spouse is unable to support their quality of life during hard times or if they have to make business loan payments, they may not have a significant source of revenue. A stress-free life that can result in company success is made possible with the help of a solid term insurance plan with sufficient financial coverage.
People are frequently motivated to become self-employed freelancers so that they can live life on their own terms. However, one must keep in mind that it’s a risky business with an erratic revenue stream. Financial obligations usually tend to be more if one takes business loans and other debts, which may even deplete personal reserves. Term insurance for self-employed people is a hassle-free, affordable option that even guarantees a good return on investment. It helps take care of the needs of the dependents, reduce medical expenses, and have a safety net against unforeseen events. Therefore, it is advised that anybody who has been hesitant to get a term insurance plan consider the aforementioned information and make an appropriate decision.
- Helps you Safeguard your savings: Your lifestyle will decide how much money you can save as a freelancer. Obtaining term insurance early on ensures that your savings will be safeguarded in the event of an unforeseen incident. If you do not have term insurance as a freelancer, an unforeseen illness or accident might quickly deplete your savings for your family. In such a circumstance, your family will be forced to take a loan.
- Option to pay premium all at once: If you own a business or are self-employed, you might not have a consistent source of income, making it challenging to pay premiums on a regular basis. On the other hand, if you go for a single premium term insurance plan, you can profit from only having to pay the premium once when you purchase the plan. This will enable you to get the most coverage and benefits possible till the end of the policy term. This simply implies that, regardless of how well your business is doing, your loved ones are financially protected from the unpredictable conditions of the market. Consequently, term insurance is highly advantageous for independent contractors and company owners.
Documents Required for Self-Employed Individuals to Get Term Insurance
When applying for a term insurance plan, self-employed individuals should be prepared with the following documents:
- ITR for the last three years + income computation (three-year average)
- CA approved P&L accounts and audited balance sheets for the last three years
- PAN Card Proof of permanent or current address (Aadhaar card, passport, voter ID, or driver’s licence).
- Most recent photo
So we are saying,
Your goals, frameworks, and financial situation are different for an entrepreneur than they are for a person who receives a salary. Prioritize your family and your business when creating a corpus that will serve as your financial substitute in the case of your passing. It is best to speak with an insurance professional who can assist you in choosing the ideal coverage and duration for your term insurance policy if you’re interested in this kind of specialized financial planning.
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