With changing times, one of the most sought-after options in a dynamic work atmosphere is to be self-employed. Be it freelancing or setting up small ventures, the satisfaction of being an owner is greatly appealing. However, with all this freedom comes its very own set of challenges, not to mention its financial implications. Amongst these critical financial resources for the self-employed, term insurance is nothing but a ‘must-have.’.
Here is why you need term insurance more than ever, especially when you are a self-employed person or are planning to tread this road. I will help you find the best term insurance plan in India.
Financial Vulnerability of Self-Employment
Self-employed individuals are without the cushion of employer-provided benefits. No company-sponsored health insurance, retirement fund, or group life insurance policy exists. It makes them more vulnerable to financial shocks.
Just imagine what might happen to your family if an unforeseen event left them with no fixed income. For most self-employed, the family’s financial well-being is based solely on them. And that is where term insurance acts as a safety net.
What is Term Insurance?
Term insurance is straightforward life insurance, providing some form of security for a stipulated period. The family gets a lump sum in case the policyholder dies. Such money can be put to use clearing all the current expenses, debt repayments, or guaranteeing that the children do not miss out on their education.
You would then compute the coverage you would need for your income, liabilities, and even your financial goals by using a term insurance calculator. This would very well be significant for self-employed persons to come to a satisfactory sum assured.
Why Self-Employed Individuals Require Term Insurance More Than Other Individuals
- Irregularity in income: A self-employed professional faces uncertain irregular income. If some months promise a big source of income, and some appear less, then term insurance is there to make sure even in those uncertain days your family pocket remains untampered and steady.
- No Employer Benefits: Unlike the salaried class, which can avail of group insurance or contribution of the employer toward a retirement fund, the self-employed have to make individual safety nets. Term insurance fills this gap with affordable and broad life coverage.
- High dependency on personal effort: You are a professional in your venture, all the earnings will directly depend upon your health and the ability to earn. Any untimely event which disallows you to contribute to family finances might create financial insecurity for the family. A robust term insurance plan keeps such risk under check.
- Loan Repayment Obligations: Many self-employed individuals take loans to fund their businesses or personal needs. Whether it’s a business loan, home loan, or vehicle loan, the burden of repayment can fall on your family if you’re not around. The right term insurance policy ensures these liabilities don’t become a burden.
Benefits of Term Insurance for the Self-Employed
- Affordability: This term insurance premium is relatively the most affordable. No matter how humongous the sum assured, the premium would be pretty inexpensive and consequently turn out affordable for a self-employed individual
- Customizable coverage: Most term insurance policies include riders covering critical illnesses, accidental deaths and income substitution and all this can be decided as per his/her requirements because being a self-employed person one would know pretty well about how to get rid of it during a crisis.
- Tax Benefits: The premium for term insurance paid qualifies to be deducted under Section 80C of the Income Tax Act. Besides, the payout received is tax-free under Section 10(10D), which provides double benefits to self-employed persons to maximize their tax benefits.
- Peace of Mind: One of the greatest benefits of term insurance is that there is peace of mind; in case of death, one knows that the future of his or her family is covered, which may give him or her the best sense of peace that a self-employed professional may have without feeling worried too much about his business.
Best Term Insurance Plan in India
There should be a careful consideration of the best term insurance plan, and here is how you should make the decision:
- Assess Your Coverage Needs: Use a term insurance calculator to determine the ideal sum assured that would be based on your current income, liabilities, and future financial goals.
- Compare Plans: One should look at plans that provide competitive premiums, high claim settlement ratios, and flexible terms. The comparison of multiple plans makes sure you have the best fit.
- Consider Add-Ons: Riders such as critical illness coverage or accidental death benefits may be added to your policy for extra protection.
- Choose a Good Insurer: Choose an insurer that has a good reputation and a great customer experience. Reputation can be confirmed by reading reviews and claim settlement data.
- Read the Print: Know what is covered and not covered under the policy, which includes exclusions and a waiting period before the onset of the policy. You might repent later when the claim arises.
Common Misconceptions about Term Insurance
“I Am Healthy; I Don’t Need Coverage Yet.”
Life is full of surprises, and no one knows when accidents or diseases will strike. Buying term insurance at a young age not only buys coverage but also sets the premium value that a person will be charged.
“Instead, I Will Invest, Not Take Insurance.”
Investment is a must because investments increase one’s wealth, but term insurance guarantees that one’s family will be financially stable in case a person dies.
Case Study: Why Rajesh Regrets Delaying Term Insurance
Rajesh was a 35-year-old freelance graphic designer who never required insurance. He thought he was fine and well because he was earning just enough. However, one day, an untimely illness kept him off work for several months. With no financial backup for the family, there was nobody to manage all the expenses as well as loan repayment.
Now, if Rajesh had invested in a term insurance policy in time, at least some kind of financial help could reach his family at this hour. His story underlines how important it is to take time.
It generates wealth but also protects it for the self-employed. So, term insurance guards your family against the uncertainty of life. The best term insurance policy in India is in store after using a term insurance calculator with the help of comparing available options.
Do not wait for a wake-up call like Rajesh. Invest in term insurance to ensure the financial future today as nothing can buy family security.
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