Life Insurance for the Self Employed, Getting Coverage Without a 9 to 5

If you’re self-employed, you don’t have the same access to life insurance as those who receive insurance through their employer.

Since you won’t be getting that coverage, you will have to find life insurance for yourself. This might sound intimidating, but it’s not too great of a challenge. Lots of folks are self-employed and figure out their life insurance without a problem.

There are many benefits to having life insurance regardless of where or how you are employed. Even if you think you don’t need life insurance, you should learn more about it’s benefits and how it can help you as someone who is self-employed.

Why Do You Need Coverage?

Life insurance coverage is something that everyone should have. It’s most important for individuals who have a family though. There are also some benefits that life insurance can have on your business.

If you have a family, here are some of the most essential reasons to get life insurance coverage. These are all necessary only if you would pass away while the policy was still in place. You should have life insurance to…

Replace your income

If you pass away, your family’s finances will be greatly impacted by the sudden deficit of your income. Even if your partner can support the family on their own, this sudden change can be a big deal. By having life insurance, your family will be protected in case anything would happen to you.

Cover funeral and burial expenses

If you happen to pass away, your family can use the life insurance money to cover these final expenses. Without life insurance, these sometimes costly expenses may be extra stressful for your family as they cope with the loss.

Pay for your children’s needs

If you still have kids at home, there are likely some things that you want to make sure they get to experience, regardless of whether you’re there. This might include going to college or getting their first car. Life insurance can come in handy and help your partner to be able to take care of these costs.

Cover costs of household tasks

Life insurance can cover many of the changes that may occur if you would pass away. For example, your partner may require additional help around the house if you would pass away. With life insurance, your partner would be able to hire a nanny or a maid to help out.

In addition to each individual item’s benefit, having life insurance really just gives your family some reassurance and a peace of mind. Plus, they won’t have the added financial stress while they grieve. 

Business Reasons to Get Life Insurance

Life insurance is a necessity for your business as well. There are many benefits to having life insurance that will impact your business in a positive way.

When you choose to use life insurance for business purposes, you have a few different options. When it comes time for you to set up your life insurance with your business in mind, you can talk to a life insurance agent to get the full details. Let’s take a look at each of them.

Key Person Coverage 

Life insurance policies allow you to take advantage of key person coverage. Key person coverage can be used if a key individual in your business passes away. This key individual is usually the one that is responsible for a big portion of the work you do as a company.

The main purpose of setting a key person is that you will be able to find a replacement in a reasonable amount of time. This coverage is essentially a guarantee that your business won’t have to function without someone in that key role.

You get to select your key person. They might be one of your most successful assets at the company. You might have another reason to select one key person over another.

The best way to choose a key person is to evaluate your business. Find out where the success is coming from. Find out what can’t be done without a particular person on your team.

As you use key person coverage, you can also increase your credibility as a company and as someone who is self-employed. This is usually a good tool to use if you’re attempting to run business transactions, like commercial borrowing.

Buy-Sell Agreement

If you aren’t familiar with buy-sell agreements, that’s okay! The purpose of buy-sell agreements is to protect the business. It also offers protection for the living owners and the surviving heirs.

If you would pass away unexpectedly, the buy-sell agreement would allow your co-owner to purchase your share of the business. Your heirs would receive the profits of this.

To get a buy-sell agreement, all of the owners of the company need to buy life insurance for their co-owners.

If your company has four or fewer owners, you should do this via a cross-purchase buy-sell agreement. Each of you would need to buy a policy for each other. A company with three owners would require nine life insurance policies among the three of you.

Business Loan

With your life insurance policy, you have the option to use the life insurance for collateral. This means that, when you are making business purchases, you can use your life insurance to cover the amount of a loan.

By using your life insurance for a business loan, you are guaranteeing the lender that you will pay them back. They will get their money back even in the case of your death.

Consider this from the point of view of the lender. They are potentially letting you borrow a large amount of money. By tying it to your life insurance, they are protected and will receive what is owed.

These loans may also be called SBA or small business administration loans.

In the case of your death, the loan will be paid for first. Then, after that is resolved, the remaining money from your life insurance will go to your family as directed.

Types of Coverage

When you are selecting your life insurance, you will have two main options. These include whole-life and term-life insurance. Depending on what you read, you will see different opinions.

Whole-life insurance is one policy that lasts for your entire life. One downside of this option is that it’s pretty expensive. Additionally, most people don’t end up needing life insurance for their entire life. A lot of the benefits go unused.

Whole-life insurance can be tricky to figure out and may have some confusing terms. The death benefit is guaranteed though. Plus, you will get a guaranteed rate at which the value will continue to increase.

Term-life insurance is more affordable. You will have a lower premium to pay. Even though the policy will not last for your entire life, you do have a choice of how long the policy lasts. If you want the policy to be active while you have kids at home, you might only need a 15-year policy.

Term-life insurance is usually simple to understand. It’s pretty straightforward and shouldn’t leave you asking too many questions. You are still almost guaranteed a payout, but you will not accumulate any cash value.

The main thing to consider when looking at types of coverage is what you actually need and will use. Most people don’t truly need life insurance once their kids are out of the house.

What is the Best Choice for Life Insurance?

The best choice for life insurance truly depends on the reasons that you’re getting it. In most cases, term life insurance is sufficient for both your family and business needs. Many people use term life insurance because of its low premium.

Depending on your personal situation, you may find that one type of life insurance works better for you. There’s no right or wrong answer in general, but there may be one for you personally.

To make the best decision, it’s important to do your research. This will give you the most information about your life insurance options. This will also help you to figure out what’s going to work best for you.

It’s a good idea to talk to a professional insurance agent so that they can guide you in the right direction. They’ll be able to tell you what you need based on your needs and wants. For example, if you have kids at home, they may suggest term-life insurance.

Talking to a professional can also be helpful because the insurance agent should be able to give you helpful information about using life insurance for business purposes.

By using your resources, you will be able to see all of your options and make the best choice for you personally. There are lots of helpful websites, guides, and independent insurance agents to help you out!

How to Shop for Life Insurance

When you are making a big purchase, you likely do some shopping around. You might compare a few prices online. You probably look at reviews, pictures, and product descriptions. The same should be true when you’re shopping for life insurance.

Do your research. You don’t want to jump into a big decision too quickly—no matter what decision that may be. This is especially true for life insurance, which will affect you, your family, and your business.

As you browse, make some comparisons. Figure out what’s important to you and see which plans offer which of your top priorities for life insurance. It can be useful to rank these options in order of best to worst. This will make your decision easier when it’s time to choose.

One of the best ways to find life insurance is to meet with an independent insurance agent. This is a good strategy to get a clear answer to all of your questions. They aren’t trying to sell you one particular plan over another.

An independent insurance agent represents multiple companies, so they can offer you all of the plans and coverage from those companies. You simply discuss your needs with the agent and they will show you what your options are.

Often, people talk to one insurance agent who works directly for one insurance company. The problem here is that it’s more of a sales transaction to the agent. Working with an independent agent is more personal.

Though it’s important to get your life insurance plan figured out, try not to rush into it. If you rush, you might skim over some pretty essential details or make the wrong move. Realize the importance of life insurance, but try to take your time. It will be worth it!

How We Can Help

We can help you to find the best life insurance to meet your needs. We don’t want you to have to do all of the research on your own and meet with countless different insurance agents.

Buying life insurance is a pretty big deal. It’s not always easy to find what you’re looking for or even to know where to start. It helps to have someone on your side and ready to provide you with any information that you may need!


In most cases, you should opt for term life insurance. This doesn’t take your personal situation into account though, so you need to do your research to find exactly what will work best for you.

As someone who is self-employed, it’s essential that you take the time to secure a life insurance policy for yourself. Even though you don’t get one from your employer, this can’t be overlooked.

Not only will a life insurance policy be beneficial to your family in the case of death, but it is also helpful for growing your business. Without life insurance, your business won’t be able to stay afloat if something happens to you or another owner.

If you’re self-employed and you don’t already have life insurance, now is a good time to set it all up. Meet with an independent insurance agent to get an unbiased opinion and all the guidance that you will need. Try to find an agent with experience working with self-employed individuals. The good news for you is you’re in the right place. 

Give us a call today at 212-573-5563 or get a quote online.  Welcome to CFAInsure!