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Self-Employed? Here’s Why You Need Life Insurance

Being self-employed can bring a wide range of benefits and freedoms which are to be celebrated, but making the switch to being your own boss can mean taking on new responsibilities or losing access to benefits you previously may have taken for granted when underemployment. For example, many employers offer life insurance or private healthcare as part of their employee perks, but when you are self-employed, it is on you to sort these out.

Ensuring that you have life insurance in place as a self-employed individual is absolutely crucial and should form part of your financial planning and budgeting strategy. Not only is it to be considered from a financial perspective, but it is also good from a business perspective so that you’re work is still protected should something happen. With that in mind, let’s take a look at some of the reasons why, if you’re self-employed, you need to make sure that you have life insurance.

Do I Need Self-Employed Life Insurance?

The answer all comes down to the level of risk which you are happy with and how you determine this risk is dependent on your circumstances. Some self-employed individuals are at a relatively low risk of death in their day-to-day work. For example, a web developer is unlikely to die whilst they are at work. Compare this to a builder or electrician, they face a much higher risk of life-changing injury or death whilst working.

It also comes down to circumstances. A young person who is self-employed, with no dependents or mortgages, might feel that a life insurance policy isn’t necessary, however, someone who is the main breadwinner for their family would be more likely to consider relevant life insurance as, if they passed away, then their family could struggle financially. Life insurance is designed to give you peace of mind, particularly during hard times.

Will My Household Insurance Not Cover Me?

Contrary to popular belief, home, contents and building insurance doesn’t include life insurance cover. If you work from home, or are self-employed and work from another location, then you will need a separate life insurance cover. Many self-employed people work from home, which is where a lot of confusion can come from. This also means that you might have expensive equipment or tools which are vital for your job, so it’s important to ensure these are protected.

Do I Not Get Perks Being Self-Employed?

There are many benefits that come from being self-employed, however, not all of these are designed to protect your income or finances. Having life insurance means that you have an invaluable level of protection when certain issues arise. Compared to a permanent employee, self-employed people don’t receive things such as:

  • Paid holiday allowances
  • Statutory sick pay
  • Redundancy pay
  • National minimum wage
  • Maternity leave

So, whilst being self-employed comes with a large range of appealing benefits, there are some things to consider. But, some types of life insurance can be tax-deductible, meaning they are very inexpensive to have. If you are unsure as to what type of insurance is best for you, it’s worth speaking to a broker as they will be able to find the best cover for you and your circumstances, whether this be executive income protection or shareholder protection.