Being a freelancer comes with some perks that other people don’t have. You can set your hours, choose what projects you work on, and have the freedom to travel or work from home. But this also comes with an inherent level of risk.
Unlike employees at large corporations, freelancers don’t typically get health or life insurance. That means if something should happen to you, your family would be responsible for paying out of pocket for any medical bills or funeral costs even if you are healthy enough to get life insurance coverage.
In this article, we will discuss why it’s important for freelancers to get life insurance.
| Takeaways |
|---|
| 1. Life insurance provides financial security for freelancers’ loved ones in the event of their untimely death. |
| 2. It is essential for freelancers to prioritize their health and well-being by obtaining comprehensive health insurance. |
| 3. Having life insurance as a freelancer offers peace of mind, knowing that dependents will be financially supported. |
| 4. Freelancers should carefully consider their financial obligations, family situation, and future plans when selecting life insurance. |
| 5. There are life insurance options available specifically designed for freelancers, including those with pre-existing health conditions. |
Unpredictability And Continuous Fluctuations
As a freelancer, you are constantly faced with the unexpected. You may have a steady stream of clients, but that doesn’t guarantee a steady income.
There are no benefits or security if you get sick or hurt. You don’t have health insurance or disability coverage as part of your compensation package as an independent contractor. And for retirement? Forget about it!
If you’re in this position and most freelancers are what’s the best way to prepare financially for these inevitable shocks? Life insurance can help provide some peace of mind when it comes to protecting your family’s future financial security in case something happens to you.
As a freelancer, it’s crucial to prioritize your health and well-being. Don’t overlook the importance of having a comprehensive health insurance plan. Our guide on an affordable health insurance plan for freelancers explores different options and provides valuable insights to help you make an informed decision.
Death May Mean That The Business Gets Shut Down
If they are the sole breadwinner, this means their family is left without an income. If they have life insurance, however, the company can continue paying for things like rent and food until it’s been sold or transferred to someone else.
The best time to start thinking about life insurance is when you have dependents who rely on your income but even if you don’t have kids yet, it’s still wise to get coverage as soon as possible.
A lot of people think that life insurance is only necessary once they’ve started a family; however, there are other reasons why it might be beneficial:
- You could be too young for certain types of policies (e.g., term vs whole life)
- You may not have enough health history information needed by many companies
Dependents And Financial Release
Dependents and financial release. The death of the breadwinner means that your family may not be able to live on its own. Not only is there no one to pay the bills, but other expenses may arise as well. Your spouse will have to sell their house and move into an apartment that doesn’t accommodate their needs.
Your children’s college fund might be depleted because they were counting on your income to pay for tuition and books. And if you had children with special needs, they could lose access to medical care because there isn’t enough money in savings accounts anymore.
You must take steps now so that these things don’t happen when you pass away unexpectedly or become incapacitated from an accident or illness
You Can Get Coverage Even If You Have A Pre-Existing Health Condition
And while most insurance companies won’t cover you if you have a pre-existing condition, some will. You just need to know where to look. As with any health situation, getting life insurance when you already have a chronic or recurring illness is difficult.
Some companies will not even consider selling coverage to someone who has this type of issue in their medical history; others might offer coverage but at significantly higher rates than those paid by healthy people who don’t have any known health conditions.
One option for freelancers with pre-existing conditions is to find an independent agent who specializes in nonstandard risks (referred to as “specialty agents”).
These agents can help identify carriers that may be open to writing policies on people with specific conditions or illnesses and they can do so at significantly lower rates than those offered by standard carriers.
Health insurance is a fundamental aspect of financial stability for freelancers. Don’t take unnecessary risks with your well-being. Discover the compelling reasons why freelancers should never go without health insurance in our comprehensive guide, and take steps to protect yourself today.
It Will Bring Peace Of Mind
If you’re like most freelancers, you spend long hours working on your business, and you will be focused on growing it. You may think about how much time it takes away from family or friends. You may worry about running out of money at some point in the future if things don’t go well for a while.
Life insurance can provide a sense of security in those situations by knowing that if something happens to you, there will be money to take care of things until your children are old enough to do so themselves or until another plan has been put in place.
It also helps if there are other bills besides mortgage payments but only one person makes all the income (such as child support). The spouse without outside employment would have less debt if they had life insurance than otherwise would be possible because the deceased person’s policy would pay everything else
It Is Affordable
The cost of insurance is based on your age and health, so it will be different for everyone. However, the premium is not affected by your income and that’s a huge bonus.
The cost of life insurance for a freelancer is minimal compared to what you can get from it. Plus, the benefit payout does not change over time (unlike Social Security). Even if you’re in poor health or living paycheck-to-paycheck right now as long as you get insured before something terrible happens you’ll still be protected when you need it most.
And if something does happen? The peace of mind knowing that your loved ones won’t have to worry about paying off debt or making ends meet is priceless.
Finally: unlike other forms of insurance like car and home coverage where premiums go up when there’s an accident or natural disaster nearby, life insurance premiums don’t increase based on location or weather patterns (unless they’re caused by acts of war).
The only way they could increase would be if you changed jobs and decided to move around more frequently; then again, this could mean getting more out of each policy than just one lump sum payment at retirement age!
Vital For Business Growth Or Business Succession
If you die, your business will be shut down. Period. There is no way around it: if your freelancing business ceases to exist, then so does your income stream.
This means that if you have a family or children that rely on your income, they will also stop receiving an income flow and therefore go into financial distress. The same goes for anyone else who depends on the money generated by your freelancing business friends, spouses, parents…the list goes on.
A life insurance policy can help provide financial stability during this time by allowing them to collect a lump sum of money that would help fill in the gap left by losing their ability to generate income through their work (if they were not able).
Thinking about transitioning to full-time freelance work? It’s essential to weigh the pros and cons before making such a decision. Our article on should you go full-time freelance? highlights key factors to consider, helping you navigate the path toward a successful freelance career.
Important For Disability And Death Benefits
If you’re a freelancer, you probably know that life insurance is important but did you know that it can also be useful in the event of disability or death?
Disability Insurance; Disability insurance is a type of life insurance policy that pays out benefits if you’re unable to work because of an accident or illness.
It’s most often used to help people make up for lost income due to their inability to work, but it can also provide funds for medical treatment and assist with other expenses related to your disablement (such as home care).
The benefit amount usually varies based on the type of disability and whether there are any children involved so it’s worth shopping around for quotes before signing up for coverage!
Death Benefits; Death benefits are triggered when someone dies while covered under their life insurance policy; this means that when a freelancer dies without having purchased any coverage before passing away, their family will not receive any money from his/her employer or family members’ policies as well as Social Security payments (unemployment).
A Source Of Retirement Income
A life insurance policy can be a source of retirement income. You may choose to receive a lump sum payment if you have enough savings, or you may opt for monthly payments until death or maturity.
If your beneficiary is your spouse, he or she can elect to receive the proceeds as a monthly annuity for their lifetime, and then it will be paid out in one large lump sum after the last surviving spouse passes away.
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Tax Benefits For Small Businesses (Via Corp To Co)
The Corp to Co program is a small business tax benefit that was created by the Small Business Jobs Act of 2010.
This bill allowed corporations and LLCs to convert to a C-corp or LLC and then immediately go back to being an S-corp or LLC, with no tax consequences. For example, if you are an LLC with two members and one member wants out of the company (or vice versa), you can use this program to make the change so that it doesn’t cost anything.
The key here is there’s no paperwork involved: all you have to do is file your corporate taxes as usual for both years (as though nothing happened) and then file form 8832 at the end of each year stating that you want the election not be made effective until after December 31st so it won’t affect your taxes.
Corporations pay double what sole proprietorships do in federal income taxes; however, they also receive significant benefits such as limited liability protection against lawsuits filed by customers who buy goods or services from them (eBay sellers should take note).
In addition, because they’re taxed twice annually instead just once like sole proprietorships/partnerships/LLCs
The Rates Are Fixed, So They Won’t Increase With Age
When you get a policy through a life insurance agent, they will determine your rate based on the information they receive from you and their underwriting department. But when you purchase a policy online, the rates are fixed. That means that even if you become older than expected and need to renew your policy at a higher rate, it won’t affect your existing plan.
It also means that because the rates are fixed, they won’t increase with age which is good news if you have no way of predicting what will happen in 10 or 20 years (or even five). You can budget for your monthly payments without having to worry about them changing in price later on down the road.
Are you a freelance writer looking to diversify your income streams? Consider expanding your horizons and utilizing your writing skills to generate a second income source. Our guide on making freelance writing a second income source shares practical tips and strategies to help you maximize your earning potential in the writing industry.
Cover Debts And Loans If You Die Suddenly
When you die, life insurance pays out to your family. If the death was sudden and violent, the money helps them pay off debts, and handle funeral costs and other expenses.
If you’re like most freelancers, your income comes from several sources: clients and side gigs, freelance gigs that don’t have health insurance benefits (if any), a 401(k) or similar plan, and other savings accounts.
Once all of these sources have been tapped into heavily enough to cover your debts and loans or once they’ve reached their limits the remaining sum is typically paid to the estate of the deceased person via the probate court process.
Final Thoughts
Life insurance is a great way to protect your business and your family. If something goes wrong, they will be taken care of. It’s also an affordable option for people that have pre-existing health conditions, which can make it hard to find coverage elsewhere. With these benefits in mind, I hope you’ll consider signing up for life insurance today.
Further Reading
Here are some additional resources to further explore the topics related to freelancers and insurance:
Health Insurance as a Freelancer: Discover the importance of health insurance for freelancers and learn about different options available to protect your well-being and financial stability.
Why Self-Employed Workers Need Life Insurance: Understand the significance of life insurance for self-employed individuals and how it can provide financial security and peace of mind for you and your loved ones.
NerdWallet: Freelancing Life Insurance: NerdWallet offers insights into the world of freelancing and provides valuable information on life insurance options that cater specifically to freelancers.
People Also Ask
What Is Life Insurance?
Life insurance is a form of financial protection that helps your family in the event of your death. It can be purchased in many forms, with each form offering different benefits.
Do Freelancers Need Life Insurance?
Yes! Since you are self-employed and working from home, it’s important to make sure your family is taken care of if something happens to you. You may not have a traditional employer to provide for them in the event of your death.
How Much Should I Buy?
The amount you need will depend on your age, health status, and financial obligations at the time of purchase but most people purchase enough coverage to replace their income for 5 years after they pass away (this is called “5-year term insurance”).
If you have children or other dependents who rely on you financially, then they must be protected after you die by buying more coverage than just 5 years’ worth of wages.
Can I Get Life Insurance As A Freelancer?
Yes, you can. Freelancers are eligible to apply for life insurance policies just like everyone else. The only difference is that you may need to take extra steps to prove your income and credit history.
What Kind Of Life Insurance Is Available For Freelancers?
There are many different types of life insurance policies available for freelancers. Some policies offer more coverage than others, but all of them provide a financial safety net for your loved ones if something happens to you unexpectedly.
How Much Does It Cost To Get Life Insurance As A Freelancer?
The cost varies depending on factors such as your age, health status, location, and occupation. The more expensive options tend to be limited only by the amount of coverage they offer (the higher the limits, the more expensive they become).
Most companies will let you compare quotes from several different providers before deciding which one is right for you and your budget!
Do You Have To Be Employed To Get Life Insurance?
No, you don’t need to be employed to get life insurance. Freelancers are often able to get lower rates on their life insurance policies because they don’t have a traditional work history or other factors that can make it more difficult for them to get coverage.
Is There Anyway I Can Save Money On My Life Insurance Policy?
One of the best ways for freelancers to save money on their life insurance policy is by purchasing it through a group plan through their employer or trade association. This is one of the lowest-cost options available and it may allow you to get coverage even if you don’t have an established employment history or a steady income stream right now.
What Kind Of Life Insurance Should I Get?
You can purchase term or whole life insurance for yourself. The term is the most common type because it’s less expensive than whole life, but also has less flexibility it only covers you for a set number of years (usually up until 65).
Whole life covers you until age 100 and allows you to build up cash value over time that can be used later in life (like if you need extra cash). You should consider both options before making a decision!
How Do I Get Life Insurance If I’m A Freelancer?
Life insurance isn’t as widely available for freelancers as it is for employees, but there are still options available to you.
You can look into group plans through your employer or your industry association, like the Freelancers Union or the National Association of Insurance and Financial Advisors (NAIFA).
If you’re self-employed, you may be able to get a policy from an independent insurance agency or broker.
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.
