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Coverage from
₹25 lakh onwards
Adjust your coverage
when you need
Term insurance for self-employed individuals offers essential financial security, helps cover liabilities and supports dependents in the absence of employer-provided benefits. Term insurance is a type of life insurance that provides coverage for a fixed period, during which the nominee may receive a payout if the policyholder passes away. Many insurers offer flexible coverage options and tax benefits under Section 80C, with eligibility often based on income proof documents such as ITRs.
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What is Term Insurance?Who are Self-Employed Individuals?Importance of Term Insurance for Self-EmployedHow to Choose the Best Term Insurance for Self-Employed?Explore Term Insurance Option From ACKOConclusionFrequently Asked Questions (FAQs)Term insurance provides life coverage for a specified period, usually 10 to 30 years or more. If the insured passes away within the coverage period, the insurance company pays the death benefits to the beneficiaries. Unlike most permanent insurance, term insurance plan does not have cash value and is considered the most affordable life insurance option available in the market.
The self-employed work for themselves instead of being employed by a company or organisation. They either operate a business or provide certain services on their own. Examples of self-employed people include:
Self-employed individuals need term insurance for several reasons, including the financial stability of their loved ones. Let’s look at some key points:
A term insurance plan often acts as a financial backup for dependents and family members to maintain their lifestyle if the policyholder passes away unexpectedly. The payout can help cover essential expenses and support their lifestyle.
Self-employed individuals may take on financial obligations such as personal loans, credit card debt, or home loans. A term life insurance payout can help family members manage these liabilities and maintain financial stability in the event of the policyholder’s death.
Term insurance is generally more affordable than many other types of life insurance. This allows self-employed individuals to get adequate life coverage without putting excessive pressure on their finances.
If you are a business owner, a sudden, an unexpected death can lead to financial disruptions for everyone associated with the business. A term policy payout may provide financial support to help dependents manage business-related obligations.
Term insurance policies are highly flexible and can be customised (sum assured and policy duration) to meet the evolving needs of the insured and their family. This means one can settle on a term that aligns with one's age, health, and financial goals.
Term insurance can easily remove the constant worry about loved ones' future.
Premiums on term insurance policies may be eligible for tax deductions, up to ₹1,50,000, under Section 80C of the Income Tax Act. Additionally, the death benefit received by nominees is usually tax-free under Section 10(10D). This may make term life insurance for the self-employed tax-deductible and efficient from both a protection and tax-planning perspective.
Term insurance plans come with additional riders such as critical illness cover, accidental death benefits, waiver of premium, and more. This allows self-employed individuals to customise their plans for comprehensive protection.
There are several factors to consider when choosing the best term life insurance for the self-employed. Below are a few factors that self-employed individuals, such as you, may consider:
Firstly, calculate how much coverage you require. Consider your income, debt, and your dependent's long-term financial requirements. A commonly used guideline is to consider coverage of around 10-15 times annual income, depending on individual needs.
Compare insurance policies from different insurers. Look into premium rates, available coverage options, and other added benefits. You may also consider plans with customisable premium features. Self-employed individuals often receive irregular payments. A customisable policy may allow them to adjust their premiums as per their needs.
Look for an insurer with an excellent reputation, solid claim settlement ratios, and positive reviews from satisfied customers to ascertain their reliability and support towards you. For example, a claim settlement ratio above 90% is generally considered good.
You may consider choosing a policy tenure that at least covers your working years or sustains until your major financial responsibilities, such as children’s education or loan repayment, are completed.
ACKO Life Flexi Term Plan is a modern, highly flexible, customer-centric solution for long-term financial protection. This unique plan allows seamless modifications to both the Coverage Amount (Sum Assured) and Policy Duration. This means you can easily increase or decrease your coverage based on your evolving life circumstances, such as marriage, buying a house, or having children.
Besides, ACKO offers a fully digital policy management system. Policyholders can easily make any policy adjustments (endorsements) such as:
Term insurance can be an important part of financial planning for self-employed individuals in India. Term insurance for self-employed individuals can help address financial uncertainties by offering structured protection for dependents. Comparing plans, assessing affordability, and choosing suitable coverage can help in making a more informed decision.
Reviewed by
Vaibhav Kumar Kaushik
Senior Director – Life Insurance Strategy
Senior Director – Life Insurance Strategy at Acko, I drive customer-centric, digitally led strategies that shape the future of Life insurance. With expertise in new business development, D2C growth, and investment management, I’ve helped build and scale Acko’s Term Life offerings by aligning customer insights with innovative product strategy to fuel sustainable growth.
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