Why You Should Consider Life Insurance If You’re Self-Employed

*This is a collaborative post on life insurance, but all thoughts and words are my own

There are many different insurance policies for your house, your vehicles, your pets and yourself. You can’t stop something bad from happening, but you can be protected financially if they do.

When you’re self-employed, there are additional policies which are helpful to have, including life insurance. Being your own boss can give you certain freedoms, but the switch may mean losing some benefits you may have if you were employed, such as death-in-service, statutory sick pay, paid holidays etc.

Think about your family

It’s not fun to think about why you’d need life insurance, but if you weren’t around, would your family be able to cope?!

For example, me and Luke own a home together, and if one of us wasn’t around, the other couldn’t afford to continue living there and paying the mortgage and bills. This can get even harder if you have kids or elderly family members that rely on you.

If you have it, then at least you’ll get some financial payout to help.

If you were employed, your employer may provide it

Life insurance for self-employed is so important because no one else will provide it for you.

My current employer, and my previous one, have offered life insurance as a benefit of working there. So while you may not be covered for as much as if you paid independently, Luke would get four times my salary if I passed away.

But if you’re self-employed you don’t have that additional benefit, and you’ll only have it if you buy it yourself.

There are different types of life insurance

There are a few different types of life insurance policies.

1. Life cover
   This will provide a lump sum to your nominated person if you pass away. You can choose to have a set amount or a decreasing amount over time to cover a mortgage.
2. Critical illness
   If you’re unable to work for medical reasons such as a stroke or cancer, this will provide you with a lump sum to live off of.
3. Income protection
   If you cannot work due to illness or disability, then this will provide you with a regular payment while you are off.

Of course, with all of these different types of insurance, there will be exclusions.

We have both life cover and income protection for Luke. For the life insurance cover, we picked a decreasing amount which would cover our mortgage, removing the largest monthly bill if Luke wasn’t around.

Then for income protection, if Luke cannot work for more than four weeks, the cover would start to pay out. We picked this as we thought we’d be able to cope for up to four weeks without him being paid, but after that, it would get trickier.

Choosing life insurance

Regardless of whether you are employed or self-employed life insurance can provide a backup if anything bad should happen. It can help minimise the financial impact on your loved ones and provide some peace of mind.

Do you have life insurance?

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