Term insurance is a vital financial product for self-employed individuals in India. Compared to salaried people, self-employed individuals often face unique financial challenges, which include uncertain income and lack of employee benefits. This article will explore the significance of term insurance for self-employed individuals to ensure their loved one’s financial stability, what to look for when choosing a term plan, and more for informed decision-making.
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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:
Their income is often the sole or primary source of income for self-employed individuals. A term insurance plan is a financial backup for dependents and family members to maintain their lifestyle if the policyholder passes away unexpectedly.
Many small business owners borrow to finance their ventures. Term life insurance ensures that, in the absence of the policyholder, no financial obligation falls on loved ones.
Term life insurance is less expensive than other forms of life insurance. This means self-employed people can afford the required coverage without compromising their finances.
One can’t deny the simplicity of term insurance. With clear terms and conditions, this life insurance option makes it easier for self-employed individuals to choose a plan that meets their needs.
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 are eligible for tax deductions under Section 80C of the Income Tax Act, a smart way to save on taxes.
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 things to look at when deciding the right term plan. Below are a few factors that self-employed individuals, such as you, to consider:
Firstly, calculate how much coverage you require. Consider your income, debt, and your dependent's long-term financial requirements. A thumb rule is to go for coverage ten to fifteen times more than your annual income.
Compare insurance policies from different insurers. Look into premium rates, available coverage options, and other added benefits.
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.
If you are really unsure about the policy, seek a financial advisor who can guide you through the options to choose a policy that suits your financial goals.
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 is crucial to financial planning for self-employed individuals such as you in India. It provides essential financial security and peace of mind. However, correctly ascertaining your needs and exploring various plans from different life insurance providers will help you choose the right term insurance to secure your family's future.
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Reviewed by Vaibhav Kumar Kaushik 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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