How to Get Life Insurance If You Are Self-Employed

How to Get Life Insurance If You Are Self-Employed

May 09, 2024

When you are self-employed, you don't have the luxury of employer-paid or partially funded benefits, such as life insurance. For many, benefits like life insurance are often forgotten or sometimes considered unnecessary. However, they are still significant as they could provide a financial safety net for your loved ones, providing them with much-needed funds in the event of your death.

Getting Life Insurance When You're Self-Employed

Getting life insurance when self-employed is usually simple and only takes time and research. You may obtain your insurance by applying online or contacting a rep directly, or you may contact a broker who might bring you multiple quotes from various competitors to consider.

Step 1: Determine How Much Life Insurance You Need

When choosing a benefit figure for your life insurance policy, consider your income and financial obligations, such as ongoing expenses, current debt, and potential future debt. For most people, calculating between 10 and 15 times their annual income might be sufficient unless you have younger children, multiple mortgages, or significant debt. You may need less if you have no children, grown children, or no mortgage.1

Step 2: Determine the Length of Coverage

Next, determine the term you need the policy to cover. If you have younger children, you may want the policy to extend until their adulthood. If you are younger, you probably want to get as long of a term as possible. That way, you would still enjoy the lower policy rate when you are much older and still have coverage even if you end up with health problems as you age. If you are older and have most of your debts paid off, you may find a shorter term is sufficient for your needs.1

Step 3: Put in an Application

Once you know what amount and term length you want in your application, get rate quotes from a few companies. If you are doing this yourself, you may want to use a site that puts your quote out to multiple companies or a broker that puts the request out to several insurance providers. Your financial professional may be able to assist you with getting quotes.2

Step 4: Compare Your Quotes

Once you have received your base quotes, compare the various amounts, terms, and costs to determine which option works with your financial situation. Once you have found the companies that work within your budget, research the companies. Check for reviews and Better Business Bureau (BBB) ratings to ensure they are a reputable company with no significant complaints against them.

Step 5: Complete the Application Process

After choosing your life insurance policy, you must complete the final application process. In most cases, this may include a medical examination, which the insurance company sets up either with an onsite medical professional or at a local facility. Most medical examinations consist of a medical questionnaire, a blood pressure check, a weight check, and a blood test. Once the results are received and are satisfactory, you may receive a change to your premium price. Then, a final policy is sent to you to be signed and dated. After that, your insurance policy is actively providing coverage.2

Important Disclosures:

This material contains only general descriptions and is not a solicitation to sell any insurance product, nor is it intended as any financial advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice, you should consult an insurance professional. You may also visit your state’s insurance department for more information.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

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1 Life Insurance for the Self-Employed: What Do You Need?

2 Self-Employed Insurance: Cost And Types You Need