As a self-employed individual, you value your independence and the control you have over your own financial future. However, it’s important to consider how you can protect that future for the people who depend on you.
While life insurance may not be the first thing on your mind as a freelancer, it should be. Having loved ones who rely on your income, such as a partner, children, or aging parents, means that life insurance is crucial for ensuring their financial security in the event of your passing.
Why self-employed workers should prioritize life insurance
Unlike traditional employees, freelancers don’t have the safety net of employer-sponsored life insurance. This means that it’s up to you to put coverage in place that protects your family and assets. Here’s why it’s a smart move:
- Protect Your Loved Ones: If something were to happen to you unexpectedly, your family would not only lose you but also the income that supports them. Life insurance ensures that your family can maintain financial stability in your absence and helps cover expenses like rent or mortgage payments, childcare, and daily expenses.
- Cover Outstanding Debts: If you have a mortgage, student loans, or credit card debt, it’s important to consider what would happen to these debts if you were to pass away before paying them off. A life insurance policy can prevent your loved ones from inheriting your financial burdens.
- Have Peace of Mind: Knowing that your loved ones are protected allows you to focus on growing your business and enjoying life, rather than constantly worrying about “what if” scenarios.
Choosing the Right Policy: Term vs. Whole Life Insurance
When it comes to life insurance, you’ll typically have the option to choose between term life insurance and whole life insurance.
- Whole life insurance provides coverage for your entire lifetime and accumulates cash value over time. However, it does come with higher premiums.
- Term life insurance, which is offered by Freelancers Union, provides coverage for a specific period and is generally more affordable. This makes it an excellent choice for freelancers who want to keep costs down.
For most self-employed workers, term life insurance is a cost-effective way to ensure financial protection during their key earning years.
How Much Coverage Do You Need?
Determining the right coverage amount depends on various factors, including your income, debts, and dependents. You’ll need to decide how much “death benefit” your family requires. Naturally, your premium will depend on the amount of “death benefit” your family will receive. For example, if you want to leave $50,000 behind to cover taxes or funeral expenses, your premium will be significantly lower than if you opt for a $1 million policy intended to support your dependents for several years. As a general rule of thumb:
- Multiply your annual income by 10 to determine a basic coverage amount.
- If you have children, consider adding $100,000 per child to help cover their future education and living expenses.
- Take into account any outstanding debts you have, such as a mortgage or business loans, to ensure those costs are covered.
- Consider the length of coverage you’ll need. If your children are young, you may require a longer term compared to someone whose kids are already in college.
How to Get Affordable Coverage
Obtaining life insurance may seem complex, but we’re here to simplify the process and make it affordable for you. As a Freelancers Union member, you have access to group coverage under Guardian’s term life insurance policy, which is a flexible and user-friendly plan designed specifically for freelancers.
With term life insurance options tailored for independent workers, you can get the coverage you need without the restrictions imposed by employers. To get started, visit our website and check out the premium rates for each policy amount based on your age, sex, and smoking status. View our rates here.
Once you’ve decided on the plan that suits you best, you can begin the application process. The application for term life insurance will list Freelancers Union Inc. as your employer, but rest assured that this will not affect your taxes or your status as an independent contractor.
You’ll be asked to provide the coverage amount you desire and whether you want to add coverage for your spouse and/or dependents.
Furthermore, with our group plan, you may not be required to undergo a medical evaluation for policies up to $100k. However, you will need to answer a few questions about your health, including whether you use tobacco and if you’ve received medical care for certain illnesses such as cancer or diabetes, among others. You’ll also be asked if you or your dependents have ever been diagnosed or treated for AIDS.
