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Term Insurance for Self Employed
Term insurance for self-employed is a type of life insurance that provides comprehensive life cover to the family of a self-employed in case of an unfortunate event. ...Read More
1 Crore Term Insurance@ Rs.21/day***
To delay is to regret
You may not always be around to take care of your family. And that’s when a term plan ensures your family is well protected.
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Return of Premium (ROP) Option^
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Individual Death Claim Settlement Ratio of 99.50%##
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Same Day Claim Processing#
:1800-266-9777
Term Insurance Plan for Self Employed
Table of Content
1. What is Term Insurance for Self-Employed?
2. Importance of Term Insurance for Self-Employed
3. How Term Insurance Works for Self-Employed/Business Owners?
4. Why Business Owners Should Buy Term Insurance
5. How to Choose Term Insurance for Self-employed?
6. Key Features of Term Insurance for Self-Employed Individuals
7. List of term insurance plans for self-employed individuals
8. Documents Required to Buy Term Insurance for Self-Employed/Business Owner
9. Summary
What is Term Insurance for Self-Employed?
When a policyholder passes away during the policy term, term insurance for self-employed individuals offers the named beneficiary/nominee financial coverage (i.e., death benefit), which helps secure their future. For self-employed people, having a term life insurance plan can be crucial to offering your family financial security in the event of an untimely death.
The nominees named as beneficiaries can use the death benefit to replace the policyholder's or life assured's lost income, or to pay off loans or other debts. Having term insurance for self employedcan give your family financial security so you can continue to live the way you want and take care of your needs even while the policyholder is not around.
Importance of Term Insurance for Self-Employed
Financial security for family
Loan protection
If you, as a self employed, are paying any EMIs of home loan, car loan, personal loan, or some other loan, your untimely death can put that entire burden on your family. That is where having an adequate term insurance can provide loan protection to your family and avoid the burden of them having to pay the hefty EMIs. The insurance cover amount would help your nominees take care of such EMIs and other liabilities.Tax benefits1
The premium you pay towards term insurance for self employed is eligible to be claimed as tax deduction upto Rs 1.5 lakh a year, deductions under 80C of income tax act. Also, term insurance tax benefits are also available under Section 10(10D). No tax is levied on the death proceeds that the nominees of the term insurance receive upon the policyholder's death.Choice to pay the entire premium at once
Term insurance plan for self employed offers single premium payment option, wherein you as a policyholder can pay the full premium at the time of policy purchase, instead of doing so on quarterly, monthly or annual basis. The entire premium payment at once helps you get rid of the stress to timely pay other upcoming premiums everytime.Business Liabilities
If a self employed is running a business, having an adequate term insurance can make sure it keeps going even after the policyholder passes away. The term insurance for business owners’ cover ensures that the costs of maintaining the business, including liabilities like EMIs and keeping it running, can be paid for through the death benefit. Considering that you might need to get financial cover for your business and family you can opt of 2 crore term insurance.Faces money problems working in the informal sector
Working as a self employed in the informal sector means facing deep job insecurity, right? Taking care of their family's day to day expenses is in itself a big task for them, let alone the thought of saving or investing for their future. That is why self-employed people should buy a term insurance to protect their family's financial future in case of their unexpected demise. Similarly, purchasing term insurance for parents ensures their financial security and helps manage unforeseen medical expenses.
Being a self-employed person, you provide your family with their main source of income. Should you pass away too soon, your family might suffer financially. With term insurance for self employed, your loved ones can pay for debts, mortgages, and their children's schooling, among other costs.
Moreover, a Term insurance for NRI, who are working independently abroad, becomes even more critical. Many self-employed NRIs face unique financial challenges in managing their family's security across international boundaries. Getting a Term Plan offers a comprehensive solution that ensures financial protection for families back in India, regardless of the policyholder's geographical location.
How Term Insurance Works for Self-Employed/Business Owners?
Similar to salaried persons, term insurance for self-employed people such as lawyers, businessmen, doctors, etc, works no differently. Just the source of income and their proofs is what primarily divides self employed from the salaried class. So, term insurance works simply for self employed/ business owners, i.e. they pay the premium and get the assured sum as cover to secure their family's financial future.
Keep in mind that as a self employed, its even more important for you, vs a salaried person, to buy a term insurance for your family/loved ones as soon as possible. The earlier you buy the term plan, the smaller your premium amount is likely to be. So why wait more? You can buy term insurance for self employed from one of India’s largest insurers, HDFC Life.
Why Business Owners Should Buy Term Insurance
The reasons why business owners should buy term insurance for self employed are manifold. Some of them are:
Payout on Death
Customisable
Serious Illness
Accidental Death Benefits
Business owners may be paying EMIs for the loans taken for either business establishment or expansion and working capital requirements. If anything untoward happens, their families will be burdened with outstanding liabilities. The death benefit that is received from the term insurance for business owners can be utilised to pay off the loans and to manage other financial requirements.
Term life coverage for self employed can be based on annual income, business value, and future financial goals. When you expand the business, you can modify the sum assured accordingly to ascertain your family’s financial security.
Business owners can opt for add-ons to the base plan, like critical illness riders3, which will enhance the coverage. If the policyholder get diagnosed with any critical illness covered under the plan, he/she receives a lump sum for treatment.
Adding the accidental death benefit rider3 to the base plan will provide an additional payout to your family for death due to an accident. This will provide additional financial security to your family.
How to Choose Term Insurance for Self-employed?
1. Understand Term Insurance
Before you buy any kind of term insurance policy for your family, its absolutely necessary to firstly understand the concept of term insurance and if you have chosen or are comparing policies, ensure to understand them all clearly before hopping onto any decision. Understanding the concept of term insurance for business owners properly would help employed individuals to take an informed decision.
2. Affordability
Another key factor is to check if the chosen term insurance’s premium is affordable for you to pay. Select the premium payment intervals, such as monthly, quarterly or annualsly, as per what suits your pocket. Do not let it be a big burden which may even result in failure to pay the premium timely.
3. Evaluate Policy Features
Self employed should make sure to closely evaluate the term insurance policy’s features, such as premium payment frequency, riders, coverage, etc so that you end uo buying the insurance plan whose features and benefits match your financial needs.
4. Assess Your Needs
You need to firstly assess your financial needs so that you can estimate the insurance cover amount required for securing your family’s financial future. This step would include checking your assets, liabilities (like EMIs), income and expenses, both current and future ones.
5. Consider Riders
Add-on riders are additional benefits of term insurance, such as accident and critical illness riders. Check these riders and get them added if you need them.
6. Assess Claim Settlement Process
When buying the right term insurance, it is equally important for self-employed to assess the claim settlement process of the insurer, which is pretty smooth for India's biggest insurance companies like HDFC Life. Many insurers nowadays offer digital and hassle-free claim settlement process, which is better than going for the physical paperwork one which can be tedious.
7. Read the Fine Print
Do not forget to read the term insurance policy’s fine print, as the devil often lies in the details. Take out extra time and do the efforts of going through such terms and conditions before buying term insurance for self employed.
8. Review Periodically
Buying term insurance for business owners is not the one and only task for self-employed individuals. It is also crucial to periodically check and review the policy, like every quarter or year. Sometimes the insurer may change some conditions or their might be changes levied by regulatory authorities which you need to be aware of.
Key Features of Term Insurance for Self-Employed Individuals
Here are some key Features of Term Insurance:
Flexible-Premium Payments
Self employed individuals can select from multiple term insurance premium payment options, such as single payment, regular payment over the chosen tenure, or limited pay period wherein you pay the premium for a smaller part of the tenure but the cover continues for the entire period of the policy.Customizable Coverage Amounts
The term insurance for self employed plans often offer the facility of customizable cover amounts, wherein self employed individuals get the flexibility to choose the amount of coverage, such Rs 1 crore term insurance etc.Income Replacement Rider
If the self employed person passes away during the term insurance coverage period, the income replacement rider benefit pays the nominees assured regular payments in parts, which acts as a replacement of the income that the self employed was earning.Waiver of Premium Rider
This feature gives self employed policyholder waiver of premium payments in the unfortunate event wherein they become disabled and are unable to earn.Death Benefit Rider
The death benefit rider ensures that your nominee receives the assured cover payout as per the policy. There is also an accelerated death benefit rider, in which, if policyholders get a terminal illness diagnosis, this feature enables them to receive a portion of the death benefit. This can help pay for medical bills and offer financial support.Conversion Option
Some insurers offer the convertibility option, wherein a term insurance policy can be converted into a permanent life insurance policy, such as whole life insurance.
List of term insurance plans for self-employed individuals
1. Level Term Insurance
For a given tenure—usually 10, 20, or 30 years—level term insurance plan offers a set death benefit. All throughout the policy term, the premium stays the same.
2. Decreasing Term Insurance
As its name suggests, the death benefit from decreasing term insurance gets lesser with time. Usually used to pay off a particular debt, such as a loan, this kind of term insurance policy for self employed individuals has a declining death benefit as the debt gets paid off over the years.
3. Convertible Term Insurance
Convertible term insurance policies let policyholders avoid medical underwriting in order to convert the policy to a permanent life insurance plan, such as whole life insurance. This may be helpful if the policyholder wants to keep their coverage even if their financial circumstances change.
4. Return of Premium (ROP) Term Insurance
Term insurance with return of premium is a policy type that allows the policyholder to get back the premiums paid throughout the tenure if the self employed person survives the policy period.
5. Renewable Term Insurance
When the term ends, renewable term insurance policies let policyholders to extend their coverage without having to go through medical examination. Self-employed people who could see changes in their financial or health circumstances may find this helpful.
6. Group Term Insurance
Self employed members of a trade association or professional association are often eligible for group term insurance at a reduced premium cost.
7. Increasing Term Insurance
The death benefit from increasing term insurance increases with time. Inflation or future financial obligations like EMIs can be covered by this kind of term insurance policy for self-employed individuals.
Documents Required to Buy Term Insurance for Self-Employed/Business Owner
The documents required to buy term insurance for self employed are:
Types of documents |
Proofs Required |
Address and Photo Identity Proof |
|
Clinical Reports |
Lab Reports indicating your existing health condition and pre-existing illnesses. |
Income Proof |
For Business Owners:
|
Photographs |
Passport-size |
Mandatory Document |
|
Summary
A key aspect of self-employed people's financial foundation is term insurance. Its flexibility, low premium cost, and emphasis on risk coverage make it essential for people paving their own professional routes instead of the usual salaried path. As long as self-employed people embrace the entrepreneurial spirit or their professional line, such as lawyers, doctors, etc, including term insurance in their financial plan guarantees that independence will last long. It also gives your loved ones (nominees) more security against the financial uncertainties of life.
FAQs on term insurance for self employed
Q. Can self-employed get term insurance?
Yes. Just like salaried individuals, self-employed people need to show proof of income in order to get a term insurance policy.
Q. What is the minimum income for term insurance?
That usually varies among different insurers and as per their set term insurance eligibility criteria. According to your income, the cover amount is given after factoring in the expected premium amount and its affordability for the self employed individual.
Q. Can self-employed individuals avail of tax benefits with term insurance?
Yes of course. Under Section 80C of income tax act, self employed individuals can claim upto Rs 1.5 lakh tax benefit every year. Also, under Section 10(10D), no tax is levied on the death proceeds that the nominees of the term insurance plan receive upon the policyholder's death.
Q. Is a medical check-up mandatory for purchasing term insurance?
Because the insurers are the ones who need to pay for the unidentified health risks of applicants, plans that do not include medical tests for term insurance before issuing the policy frequently provide lesser coverage. As medical tests determine a prospective policyholder's general health and fitness, which helps the insurer set rates and issue policies appropriately, buying a term plan that includes medical tests is always a better idea.
Q. Can term insurance cover business debts for self-employed individuals?
As a self-employed person, funds may be needed to purchase machinery, obtain raw materials, and cover other expenses, whether your business is new or established. When you raise money through such large debts like working capital or business loans, you need to adequately take term insurance whose cover can sufficiently take care of the business debts in your absence.
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- Best Term Insurance For Heart Patients In India 2024
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Francis Rodrigues
Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.
Written By:
Vishal Subharwal
Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.
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1. As per Income Tax, 1961. Tax benefits are subject to changes in tax laws
3. For all details on Riders, kindly refer to the Rider Brochures available on our website.
@As per integrated annual report FY23-24, available on www.hdfclife.com. As of May 2024
^ Available under Life & Life Plus plan options
#Provided we have received all the relevant and required documents and no further investigation is required. Claim settlement process would be completed within stipulated timelines once the claim request is approved
##Individual claim settlement ratio by number of policies as per audited annual statistics for FY 23-24
***Online Premium for Life Option for HDFC Life Click 2 Protect Super (UIN: 101N145V07), Male Life Assured, Non-Smoker, 20 years of age, Policy term of 25 years, Regular pay, Annual frequency, exclusive of taxes and levies as applicable. (Monthly Premium of 622/30=20.7).
**7% online discount available on 1st year premium only
~Tax benefits of ₹ 54,600 (₹ 46,800 u/s 80C & ₹ 7,800 u/s 80D) is calculated at highest tax slab rate of 30% on life insurance premium u/s 80C of ₹ 1,50,000 and health premium (Critical illness rider) u/s 80D of ₹ 25,000. Tax benefits are subject to conditions under section 80C, 80D, 10(10D) as per Income Tax Act, 1961. Please consult your tax advisor for more information.
*Online Premium for Life Option, Male Life Assured, Non-Smoker, 20 years of age, Policy term of 40 years, Regular pay, Monthly frequency, exclusive of taxes and levies as applicable
ARN - ED/03/25/22510