Life Insurance for Self-Employed in India

What is Life Insurance for Self-Employed in India?

Life insurance for self-employed individuals in India usually comes in the form of term life insurance. This cost-effective policy pays a death benefit to the nominee if the insured passes away during the policy term. This cover becomes a vital financial shield for those without fixed salaries or employer-backed benefits. The payout helps dependents manage daily expenses, repay debts, and replace lost income, ensuring their lifestyle and plans remain secure even in the breadwinner's absence.

Why Life Insurance for Self-Employed/Business Owners is Important?

Here are some of the key reasons why life insurance is essential if you are self-employed or run your own business:

• Irregular income and flexible premium options
  As a business owner, your income may not always be steady. Life insurance allows you to choose flexible premium payment modes, monthly, yearly, or even single-pay, to secure long-term protection without worrying about cash flow disruptions. This ensures your family stays financially secure even if your business faces tough times.

• Protection against business liabilities
  Unlike salaried individuals, self-employed professionals often carry business loans for expansion, equipment, or working capital. In case of an unfortunate event, life insurance makes sure your family isn't left to shoulder these debts. The payout from the policy can help repay loans and keep the business stable.

• No employer-provided benefits
  Corporate employees often get life cover, health insurance, and retirement benefits through their employers. Self-employed individuals don't have that cushion. Life insurance fills this gap by creating a financial safety net for your family, ensuring that long-term goals like children's education, marriage, or retirement are not derailed.

• Covering income uncertainty in volatile markets
  Running a business means facing market risks, economic downturns, or sudden disruptions like the COVID-19 lockdowns. Life insurance ensures that even if your income is disrupted or you're not around, your dependents still have financial support to cover daily expenses and future commitments.

• Additional protection through riders
  Life insurance plans allow you to add riders like critical illness, disability, or accidental death cover at a nominal cost. This is especially useful for business owners, as an illness or disability could directly affect their earning capacity. Riders ensure financial continuity for your family in such situations.

Term Insurance for Self-Employed and Business Owners Plans

Here is the list of term insurance for self-employed people in India. These plans may offer return of premiums or no-cost benefits as per your suitability.

*Disclaimer: The list of insurers mentioned are arranged according to the alphabetical order of the name of insurance company respectively. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. The list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website www.irdai.gov.in

* You can use the term insurance calculator online to get an estimate of the premiums you would need to pay for the desired life cover.

How to Select the Right Life Insurance for Self-Employed Individuals?

With so many life insurance options in the market, choosing the right one can feel overwhelming. Here are some important points self-employed individuals should keep in mind before buying a policy:

• Sufficient Coverage: The sum assured should be large enough to cover your family's daily expenses, repay loans, and meet long-term goals like children's education, marriage, or your spouse's retirement security.

• Policy Term: Unlike salaried employees who often retire by 60, many self-employed people continue working well into their 70s. It's wise to choose a policy term that offers longer protection, ideally up to 80 or 85 years of age.

• Premium Payment Options: A limited premium payment term can be more practical since income can fluctuate when you're self-employed. This allows you to pay off the premiums within a few years while keeping the cover active for the entire policy term.

• Medical Check-Up: Always disclose accurate health details in the proposal form and undergo the required medical tests. This ensures transparency and avoids issues at the time of claim.

• Read Policy Documents: Carefully review the policy terms to understand inclusions, exclusions, and benefits. When in doubt, consult a financial advisor for clarity.

• Add Riders for Extra Protection: Enhance your base life insurance plan with riders such as critical illness, accidental death, or premium waiver. These add-ons provide wider coverage at a relatively low cost.

Why Should You Buy Life Insurance for Business Owners?

• Business Loan Protection: Ensures outstanding loans are repaid without burdening family members.

• Key-Person Insurance: If you're critical to business operations, insurance helps sustain continuity.

• Succession Planning: Proceeds can support a smooth transfer of ownership to heirs or partners.

• Stability in Uncertain Times: Helps cover business disruptions caused by the owner’s absence.

Is Life Insurance for Self-Employed Tax Deductible?

Yes. Life insurance premiums paid by self-employed individuals are eligible for tax deductions:

• Section 80C: Up to ₹1.5 lakh deduction on premiums paid for self, spouse, and children.

• Section 10(10D): The death benefit received by your nominee is fully tax-free, subject to conditions.

• If you also purchase health riders (like critical illness), you may claim deductions under Section 80D.

This makes life insurance for self-employed tax-deductible, while ensuring family protection.

How to Buy Term Insurance for Self-employed from Policybazaar?

Following is a step-by-step guide to buy life insurance for self-employed from Policybazaar:

Step 1: Visit the Term Insurance for self-employed page of Policybazaar

Step 2: Enter basic details such as your name, contact information, gender, and date of birth, then click on Check Your Premium Now.

Step 3: Provide information about your occupation, annual income, education, and smoking habits.

Step 4: Based on your input, a list of suitable life insurance plans for self-employed individuals will be displayed.

Step 5: Compare the options, select the plan that fits your needs, and pay the first premium to get covered.

What Documents Required to Buy Term Insurance for Self-employed/Business Owner

Following is a list of important documents required to buy term insurance for business owners from Indian insurance companies:

Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.

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