It’s no secret that there is an unprecedented proliferation of small businesses in our country. Both men and women are starting their own businesses at a rate that has never been seen before.
In the business world, they call these solopreneurs or entrepreneurs with one employee (themselves!). While this is great for our economy and society at large, it creates a new set of challenges where life insurance is concerned.
The truth is, most life insurance products are designed to fit within the traditional 9-5 concept of employment. They’re made for people who have steady paychecks, health benefits and other perks associated with full-time work.
| Takeaways |
|---|
| 1. Freelancers need to consider life insurance options to protect their loved ones financially in case of unforeseen events. |
| 2. Assessing coverage needs is essential for self-employed individuals, as their income may fluctuate compared to traditional employees. |
| 3. Life insurance policies should be tailored to individual circumstances, considering factors like health, age, and financial goals. |
| 4. Freelancers can choose between term life insurance and permanent life insurance, each with its benefits and considerations. |
| 5. Life insurance can offer an additional layer of financial security for freelancers, providing peace of mind in their entrepreneurial journey. |
Life Insurance Comes In Three Basic Types: Whole, Universal, And Term Life
Whole life insurance is the most expensive type, but also the most comprehensive. You pay premiums for your entire life, and then your beneficiary receives a payout when you die. This is a good choice for freelancers who have dependents and/or want to leave a legacy behind.
Universal life insurance provides you with flexibility in how you use your premiums: They can be used to build cash value or invested in mutual funds like stocks, bonds, and real estate investment trusts (REITs).
You can even withdraw money from these investments without penalty from time to time if needed though this may affect how much death benefits are paid out.
Term life insurance offers protection against death at an affordable rate since it only lasts for a set period of years typically 10-30 years depending on what option is chosen by the insured party.
Because term policies are relatively cheap compared with other forms of coverage such as whole or universal plans they’re often considered ideal options among freelancers because they provide enough security while still fitting into their budgets
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Term Life Is The Most Affordable Type Of Coverage For Freelancers And The Self-Employed
Term life insurance is the most affordable type of coverage for freelancers and the self-employed. It’s also great for people who are young and healthy, or even older but still have a family to support.
What it covers: Death benefits only; there are no other cash values available with a term policy.
What it costs: The monthly premium depends on your age, health, smoker status, and other factors.
If you’re in your 20s or 30s without any health issues or current medical conditions, expect to pay less than $20 per month;
If you’re older than 50 and have some medical issues in your past or present (like high blood pressure), expect to pay well over $100 per month even if they’ve been under control for years now!
Your Freelance Income May Be Eligible For Coverage
If you’re a freelancer or self-employed, your freelance income may be eligible for coverage. Some policies will base premiums on your income, while others will base them on assets.
If you don’t have a steady income, some insurers will consider your average monthly earnings over the last twelve months to determine whether or not they’ll insure you.
It’s important to note that some insurers may require a minimum number of years as an independent contractor before they’ll accept applicants who make up their hours and schedule.
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It’s Important To Consider How Much You Currently Earn As Well As What Income You Hope To Earn
When it comes to life insurance rates, you should consider how much you currently earn as well as what income you hope to earn.
Whether your business is new or established, life insurance providers don’t want to take on a lot of risks so they will factor in expected and future earnings into their calculations. The more money you make, the higher your premiums will be.
Think about how much money your family would need if something happened and you were no longer around. Would they be able to pay their bills?
Could they cover childcare costs so that someone could go back to school? Would they have enough money left over after covering initial expenses like funeral costs?
Your Health Can Affect Your Premiums, But Not Always For The Reason You Might Think
The most important factor that affects your premium is your health. Many people don’t know this, but it’s true!
- Smoking can raise your premiums by up to 50%.
- Drinking alcohol can increase your premiums by as much as 20%.
But here’s the thing: even if you don’t smoke or drink, the way you live can affect how much money you pay for life insurance. For example:
If you are overweight or obese, it will cost more to insure than someone who is not overweight or obese.
This is because overweight and obesity put people at higher risk for certain diseases such as heart disease and diabetes two major causes of death among Americans (and therefore a major cause of life insurance claims).
If You Have A Pre-Existing Health Condition, Try Calling Multiple Providers To See Who Can Offer You The Best Rates
If you have a pre-existing health condition, try calling multiple providers to see who can offer you the best rates. It might be more difficult for someone with a pre-existing condition to get coverage, but it’s not impossible.
Certain health conditions may affect your premiums, so check with your doctor to see if you have any of them.
If your doctor says that you do have a pre-existing condition and cannot get coverage on your own or through one of these other sources, then it may be easier for him/her to write it off as an actual medical expense on taxes (as long as it was prescribed).
This way he/she can help offset its cost in his/her budget.
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If You’re A Woman, You May Pay More Than Men Do But Only If You Smoke Or Drink Regularly
A study shows that women are more likely to file claims than men. But it’s not because they’re more prone to accidents or terminal illnesses it’s because they tend to smoke and drink regularly, which increases their risk of developing health issues like heart disease and diabetes.
It makes sense that these factors would result in higher life insurance costs for women since having one or both of these habits can lead to serious health problems down the line.
The same goes for taking medication for an existing condition or chronic illness like asthma or high blood pressure: if you need daily doses of medicine, then getting a quote may come with some extra cost attached because medical coverage is included in all policies.
You May Pay More If You Participate In Risky Hobbies Like Scuba Diving Or Skydiving
As you’ve probably noticed, the cost of life insurance for freelancers can be quite different from that of a traditional employee. The reason for this has to do with your risk level, which is determined by some factors.
One factor is whether or not you participate in risky hobbies such as skydiving or scuba diving. If you do, then it’s likely that your premiums will be higher than someone who doesn’t participate in such activities.
Taking Care Of Yourself Can Reduce Your Risk Of Developing Health Issues That Could Make Coverage More Expensive Or Harder Find
Having a health plan in place can be a great way to protect yourself, but it’s important to remember that you play an active role in ensuring that your policy is as effective as possible.
By taking care of yourself and following some simple guidelines, you can reduce the chances of developing costly health issues that could make coverage more expensive or harder to find.
Eat Healthily
Most people know that eating well has numerous benefits for their overall health, but what might not be obvious is how this translates into financial terms.
Healthy foods have less saturated fat and sodium than junk food does, which means lower risks for heart disease and high blood pressure two common concerns among freelancers and entrepreneurs who don’t have access to group plans through their employers.
Exercise Regularly
Not only does exercise help keep your body in good shape, but it also helps improve mental health by releasing endorphins (the chemicals responsible for feelings of happiness), reducing stress levels.
And allowing you time away from work so you can recharge your batteries after long days at home working on projects while trying not to think about how much money you’re losing because of all those unpaid medical bills.
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There Are Several Ways To Get A Discount On Your Premiums
If you’re a freelancer or self-employed with no spouse or kids, you may qualify for a discount on your premiums. You can also get discounts if you are a nonsmoker, have never smoked, and are in good health.
Other circumstances could help lower your premiums, for example, having a life insurance policy from another company might mean getting a discounted rate from another company as well.
If all of this sounds confusing to you, don’t worry! There are plenty of ways that our team at Policygenius can help guide you through the process of finding and applying for the best coverage for yourself and your family at an affordable price point.
Your Marital Status Matters When It Comes To Life Insurance Rates
You’re a freelancer or self-employed, and you have some extra money to invest in your future. You don’t need life insurance, right? Wrong! Life insurance is vital for any professional who doesn’t have the traditional safety net of a company pension plan or health benefits package.
Even if you think you don’t need coverage because your spouse has a good job and can support the two of you financially in case something happens to one of them (and there are no other dependents), consider this:
Another way that life insurance rates differ by marital status is through what’s called policy loans.
If someone dies while they still owe money on their policy loan (like if they’ve taken out several loans over time).
Their beneficiaries aren’t required to pay back those funds with interest but they do have to take care of any outstanding balances when they inherit an individual account payout option or variable universal life insurance policy.
Children Don’t Typically Affect Life Insurance Rates But They Should Affect Your Decision About Whether To Buy Coverage At All!
When you’re deciding whether to buy life insurance and how much coverage to get, children don’t affect the cost of your life insurance policy.
That’s because a child doesn’t change the risk that you’ll die it changes how much money will be available for your family if you should pass away.
There are several reasons why children should be a consideration in determining whether or not to get coverage at all, including tax benefits and estate planning benefits.
However, when it comes time to decide on an appropriate amount of life insurance coverage (or any other type of insurance), it’s important not to overlook their impact on things like premiums and term lengths.
The Older You Get, The More Expensive Life Insurance Usually Is But There Are Still Affordable Options For Older Adults
Life insurance costs more the older you get. If you’re in your early twenties and looking at life insurance quotes online, a 20-something probably won’t see many price variations.
But as you age and approach retirement age, the premiums will go up significantly unless you decide to buy term life insurance instead of whole life or permanent whole life coverage (see below).
That said, it’s still possible to find affordable options for older adults: if you have health issues that make it hard for companies to offer non-cancellation rates based on your health status alone;
Or if you live somewhere that has high mortality rates due to weather conditions (heavy snowfall) or an especially high risk of natural disasters (earthquakes).
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If Your Spouse Has Access To Employer-Provided Life Insurance Through Their Job, That Policy May Be Enough On Its Own
If your spouse has access to employer-provided life insurance through their job, that policy may be enough on its own. If your spouse is the sole breadwinner in your family or is the only one with a steady income, you might not need to buy life insurance at all.
If you have a spouse and children (or others who depend on your income), then it’s likely worth considering some of these options for additional protection.
Conclusion
Getting life insurance might not be the most exciting way to spend your free time, but you’ll sure be glad you took care of it if something terrible happens. No one wants to think about their death but as a freelancer, that’s exactly what you need to do.
After all, you won’t have access to a 401(k) or other benefits when you die; your savings may run out before your loved ones can pay for the funeral and other expenses. There are more than enough things to worry about in life without adding this kind of stress to the mix.
It may seem weird at first, but getting life insurance is a smart and responsible thing for any freelancer or self-employed person to do so what are you waiting for?
Further Reading
NerdWallet – Freelancing Life Insurance: Get insights into life insurance options specifically tailored for freelancers, ensuring financial security for your independent career.
Policygenius – Life Insurance for Self-Employed: Learn about the importance of life insurance for self-employed individuals and find the right coverage to protect your business and loved ones.
Legal & General – Self-Employed Life Insurance Guide: This comprehensive guide provides valuable information on life insurance choices for self-employed professionals, helping you make informed decisions about your future.
FAQs
How does freelancing impact life insurance eligibility?
Life insurance eligibility for freelancers can vary depending on factors such as income stability, health, and coverage needs. Insurers may assess risk differently for freelancers, so it’s essential to work with an experienced agent to find suitable options.
Can self-employed individuals get life insurance with pre-existing medical conditions?
Yes, self-employed individuals can often secure life insurance coverage even with pre-existing medical conditions. However, the availability and cost of coverage may depend on the type and severity of the condition. It’s advisable to disclose all relevant information during the application process.
Is life insurance more expensive for freelancers compared to traditional employees?
Life insurance premiums for freelancers may differ from those for traditional employees. Freelancers’ premiums could be higher due to perceived income fluctuations and potential lack of employer-sponsored coverage. However, the actual cost varies based on individual circumstances and coverage choices.
What types of life insurance are suitable for self-employed professionals?
Self-employed professionals may consider both term life insurance and permanent life insurance options. Term life insurance provides coverage for a specific period, while permanent life insurance offers lifetime protection with potential cash value accumulation.
Can life insurance be used as an investment for self-employed individuals?
Permanent life insurance policies, such as whole life and universal life, can build cash value over time. This cash value can be accessed or borrowed against during the policyholder’s lifetime, providing a form of investment. However, the primary purpose of life insurance should be financial protection rather than investment.
Costantine Edward is a digital marketing expert, freelance writer, and entrepreneur who helps people attain financial freedom. I’ve been working in marketing since I was 18 years old and have managed to build a successful career doing what I love.