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5 Reasons A Self Employed Must Purchase A Term Insurance

Updated On Nov 08, 2021

Your recent experience in the COVID environment must have impacted your priorities to some extent. The truth is such times are part of life in small and medium-sized businesses. However, that does not mean your families and personal life should remain unprotected from the financial consequences of natural events. Life insurance, especially term insurance plans can safeguard your family financially and help them achieve their goals even in your absence.

Reasons To Purchase Term Insurance Plans By Self Employed People

In fact, being self-employed makes it all the more important for you to have a term life cover as soon as possible. Here are five reasons why:

  • Lack of Employer Benefits

Unlike the employees in the organised sector, you lack employer benefits like employee provident fund, health and life insurance covers. Being the employer yourself, you need to spend some money to secure some of these for your family.

You also need to invest some money regularly towards your retirement and other financial goals, including children’s education and marriage. Thus, a term insurance plan is necessary to take care of these goals in case you cannot complete the investments due to a contingency.

  • Business Ownership Transfer Costs

You should consider the cost of ownership transfer to the next generation in case anything happens to you or you cannot actively participate in the business. The new generation may take some time to catch up with the business needs and may need money to continue operations.

This would also include any loans and financial obligations you normally have in your business. In case you have taken a loan for branding and expansion activities of your business, your term life insurance should cover that too.

  • Tax Benefits

Even as a self-employed taxpayer, you can use the tax-saving schemes to reduce your personal income tax. The term insurance plan also provides you with tax relief under section 80C of the Income Tax Act.

The term insurance premium along with other investments can reduce your taxable income in a financial year by up to Rs. 1.5 lakhs.

  • Life Cover with a Single Premium

The best part with a term insurance plan is that you can get 30 years cover with a one-time premium payment. That means your family will remain financially safe from contingencies regardless of the business performance or markets.

You can secure a term life cover of Rs. 1 crore with a premium of about Rs. 1.5 lakhs at the age of 30. Pricing like this is what makes term insurance so effective for the financial safety of your family.

  • Financial Support in case of Disability & Terminal Illnesses

Term life insurance has multiple additional benefits which are useful in different scenarios. The best term insurance plans offer critical illness and accidental disability cover as well. If you think, both of these conditions could be financially devastating for a family, especially when you are self-employed.

Both the business and your family depend on your wellbeing to function, and the critical illness and physical disabilities are two risks to your capacity.


Thus, don’t wait; buy a term insurance which helps you safeguard your family from contingencies out of your control. The limited premium payment option is the best way to ensure long-term safety, which is free from the effects of business cycles.

Also read:

How Term Insurance Policy Can Help You Enhance Your Tax Savings?

How Is Term Insurance More Beneficial Than Other Types Of Life Insurance Policy

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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