10 Reasons Life Insurance for Freelancers is Essential
For a regular employee, it is easier to manage things like retirement and insurance.
All they need to do is talk with the people from the Human Resources department.
Freelancers, on the other hand, need to act as their own Human Resources department.
Meaning, they need to figure out how they can have financial wellness on their own.
One of the worst things about leaving that 9–5 gig is losing the health insurance that came with it. – Pogo
It is imperative to have insurance – more so when you are a freelancer.
Here are the ten reasons why insurance for freelancers is essential:
1 – To protect finances
Most freelancers don't often take out a life insurance policy.
It can be because it's not your priority at the moment.
Another reason could be that your spouse has employee life insurance.
Sure, you can benefit from your partner's life insurance policy in the future.
But what if something unprecedented happens to you?
It can be a hassle for your spouse to liquidate their insurance to pay for your bills.
That said, having your insurance policy ensures that you won't be a financial burden for your family.
2 – To keep family protected
If you have a family who is dependent on your income, then getting a life insurance policy lets you provide funds to support them even if you pass away.
Ask yourself the following questions:
- Will my family be financially stable if I pass away?
- Does anyone depend on my income to pay for things like rent, education, etc.?
Here's the thing: Life insurance can provide funds to offset funeral expenses and pay for your children's education.
It can also provide income replacement funds to help keep your family financially stable.
For those with children, you can also enrol kids in the Children's Health Insurance Program (CHIP). – Decent
3 – For own peace of mind
Although you're indeed the master of your own craft, and you're the one who could decide what to do with your income, time, and priorities.
On the other hand, health issues might start to come up, and you have to pay for things like debt, and there will be no company or client to back you up.
Yes, freelancing is great.
But it would help if you still thought about how death, old age, disability, or sickness can strike you hard.
More so that there's no company healthcare or employee benefits to save you.
If you're young and healthy right now, you need to get a comprehensive insurance plan for your peace of mind.
Doing so is an excellent investment in the long run.
It allows you to live your best times right ahead, and at the same time, protecting the only life you have.
At PRU Life UK, they always tell their clients that it would be best to have a backup despite being a successful freelancer.
After all, we cannot predict the future.
Even with a small policy, you'll find yourself sleeping soundly at night knowing that you and your loved ones are protected in case something happens to you.
4 – To pay off debts
Do you have a mortgage or any outstanding student loans? How about credit card debt? How about undelivered portions of freelance contracts?
Keep in mind that your family will handle these things in case something happens to you.
So, if you have unpaid loans, they will be stuck to repaying those loans for you.
Not to mention the costs of a burial or funeral.
These will be all your loved ones' financial responsibilities after you're gone.
This is true unless you have a life insurance policy to back you up.
So, it would be best to have an insurance policy.
Your life insurance will cover all these expenses, especially during a challenging and emotional time, without being a burden to your loved ones.
5 – To prepare for retirement
Similarly, you can also use life insurance to ensure that your retirement savings last a long time.
An annuity is almost like a DIY pension plan.
You're putting sums of money in an insurance product, and you'll be getting a steady source of income month after month, as long as you're alive.
6 – To build a financial asset
Getting life insurance is a financial asset on your part.
It allows you to boost your credit, helping you get a loan or health insurance.
Many policies offer cash value – which, even in bankruptcy, it couldn't be touched by its creditors.
7 – Covers added estate taxes
When someone dies, their heirs will usually face inheritance or real estate taxes on any asset they receive.
If you're worried that your loved ones will get a massive hut of tax bills after you pass away, getting a life insurance policy will help cover these costs.
8 – It is affordable
One of the main excuses, and in most cases, freelancers tend to make for not purchasing life insurance is the cost.
But the reality is that this is pretty affordable for most people.
In certain areas, the local Chamber of Commerce may also offer group health insurance for freelancers and self-employed individuals. Affordable health insurance for self-employed individuals – If you cannot afford a health care plan but you don't qualify for Medicaid, you may qualify for a health insurance subsidy. – Policy Genius
Term life insurance is less expensive if you compare it to whole or universal life insurance.
Also, the younger and healthier you are, the lower your premium will be.
This is true unless you smoke or have any pre-existing health conditions.
9 – Anything can happen
Life insurance isn't just for you.
It can protect your freelance business from any liabilities in case something unprecedented happens to you.
This includes financial instability.
Whether it's providing short term cash or keeping your operations going, life insurance can help keep your business afloat.
The best part is that it won't cause a financial burden to your loved ones.
10 – Secure Your Future
Replacing lost income is one thing, but you could make a difference for years to come with the right insurance policy.
For kids who might have lost a parent, college is still possible because of the life insurance that was left behind by their mother or father.
If you already have a vision of what your loved ones' lives will look like in the future, then getting life insurance will make that picture a reality.
And that is whether you're still in the picture or not.
What's the Best Insurance for Freelancers?
You'll have various choices to pick from exploring life insurance options.
First and foremost, you need to be aware of or be familiar with the market's policies.
Next, you're going to choose an insurance policy that will cover your needs and fit into your budget.
Know that there are three kinds of protection for freelancers:
Critical illness benefit
This insurance type will provide you with a lump-sum payout in case a critical illness has diagnosed you.
Examples are heart attacks, cancer, stroke, given that they meet the definition of your insurer.
And the full payout has been made, that's usually where the policy will stop.
Income protection insurance
As a freelancer, your health is essential and should be your number one priority.
Unlike most salaried employees, you don't get a paid sick leave.
So, what will happen if you have a critical illness that will prevent you from working for an indefinite period?
Even by getting a small policy, you can find yourself sleeping a little better at night.
That's because you have income protection insurance that will help replace those lost earnings.
A major challenge facing independent, self-employed or freelance works is finding affordable and reliable health insurance. – The Balance
This will also provide you with your regular monthly income.
Usually, you'll be getting a percentage of your income until you've regained your health and your fit enough to work again.
This will be the one to pay out a predetermined sum in case of your death within the policy term.
This is, of course, subject to terms and conditions.
Once a claim is successful, the policy will payout, and usually, the cover will stop.
One of the most important ways that a freelancer can make their future more secure is to have a term life insurance policy that would cover their family's needs if they were to die unexpectedly. – Quotacy
Picking the Right Insurance Policy
It can be challenging to look for an insurance policy that's right for you.
That said, we've listed down some factors that you might want to consider:
It would help if you decided how much coverage you want.
Do you have a young family, and do you want to keep them financially secure if you pass away?
Knowing what you want is essential in knowing how much you ought to pay.
A great way to gauge whether a life insurer is reliable is to look at the settlement ratio claims.
That's the total number of claims the insurer has settled over the raised claims in a year.
Rates will often vary from one insurer to another.
That's why it's vital to do market research to compare benefits and covers these life insurance companies offer.
While you're at it, also be aware that quotes vary depending on the type of insurance policy that you want to get or purchase.
Over to You
Freelancing is an exciting career path that one can pursue because of the flexibility and other benefits that it provides.
It also offers you a wide range of opportunities.
Nonetheless, you must protect yourself and your loved ones from the uncertainties of life.
And one way to do that is to have life insurance.
Doing so ensures that your income is protected, and your family won't drown from debt if something unprecedented happens to you.
Once the financial burden is lifted off of your shoulders, working passionately can be a breeze.
Since I went freelance full-time several years ago, health insurance for freelancers has prevented me from racking up serious medical debt. – Mint