5 Reasons You Need Term Insurance as a Self-Employed Person

2024-08-02

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Are you running a small or medium-sized business? Your recent experience in the COVID environment must have impacted your priorities to some extent. The truth is such times are part of life in the small and medium-sized businesses.

However, that does not mean your families and personal life should remain unprotected from the financial consequences of natural events. Life insurance, especially term insurance plans can safeguard your family financially and help them achieve their goals even in your absence.

In fact, being self-employed makes it all the more important for you to have a term life cover as soon as possible. Here are five reasons why:

1. Lack of Employer Benefits

Unlike the employees in the organised sector, you lack employer benefits like employee provident fund, health and life insurance covers. Being the employer yourself, you need to spend some money to secure some of these for your family.

You also need to invest some money regularly towards your retirement and other financial goals, including children’s education and marriage. Thus, a term insurance plan is necessary to take care of these goals in case you cannot complete the investments due to a contingency.

2. Business Ownership Transfer Costs

You should consider the cost of ownership transfer to the next generation in case anything happens to you or you cannot actively participate in the business. The new generation may take some time to catch up with the business needs and may need money to continue operations.

This would also include any loans and financial obligations you normally have in your business. In case you have taken a loan for branding and expansion activities of your business, your term life insurance should cover that too.

3. Tax Benefits

Even as a self-employed taxpayer, you can use the tax-saving schemes to reduce your personal income tax. The term insurance plan also provides you with tax relief under section 80C of the Income Tax Act.

The term insurance premium along with other investments can reduce your taxable income in a financial year by up to Rs. 1.5 lakhs.

4. Life Cover with a Single Premium

The best part with a term insurance plan is that you can get 30 years cover with a one-time premium payment. That means your family will remain financially safe from contingencies regardless of the business performance or markets.

You can secure a term life cover of Rs. 1 crore with a premium of about Rs. 1.5 lakhs at the age of 30. Pricing like this is what makes term insurance so effective for the financial safety of your family.

5. Financial Support in case of Disability & Terminal Illnesses

Term life insurance has multiple additional benefits which are useful in different scenarios. The best term insurance plans offer critical illness and accidental disability cover as well. If you think, both of these conditions could be financially devastating for a family, especially when you are self-employed.

Both the business and your family depend on your wellbeing to function, and the critical illness and physical disabilities are two risks to your capacity.

Selecting the Best Term Insurance Cover:

The best term insurance cover should not only offer adequate life cover to your family, but it should also aim to make it convenient for them to get the benefits they deserve. For example, the Canara HSBC Life Insurance has an attractive claim settlement ratio of 99.23%^. Buying iSelect Smart360 Term plan will have the following benefits:

Life cover with in-built Terminal Illness Cover: Ensures lower premium cost, plus sufficient cover for major illnesses.
Accidental disability cover with Premium Waiver: With iSelect Smart360 Term Plan, you can choose opt for additional covers for a minimal cost. For instance you can opt for additional amount payed to you in case of accidental disability, and another add-on that waives off all future premiums if the unfortunate were to happen.
Benefit Pay-out as Regular Income: Ensure your loved ones receive a monthly income even in your absence by opting for a regular income payout option. You can also choose a lump-sum payout or a combination of part lump-sum and part regular income.

Thus, don’t wait; buy a term insurance which helps you safeguard your family from contingencies out of your control. The limited premium payment option is the best way to ensure long-term safety, which is free from the effects of business cycles.