Reasons You Need Term Insurance Plan as a Self-Employed Person

• 11th Mar 2021
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As essential as a term insurance plan is for everyone, its importance is further amplified in the case of self-employed individuals. As a self-employed person, you may already have a number of challenges in your way. Your income may not always be steady and can fluctuate from time to time. Common employer benefits, such as a pension plan or life insurance , can elude you. And the overall hassles of running a business or looking for income opportunities can be hard. A term insurance policy can be a saviour here.

Here are some reasons why you need a term insurance plan as a self-employed person:

1. You may not have an employer-sponsored plan: People who work in the formal sector get many benefits, such as an employer sponsored pension plan or an employer provided insurance policy. But in the case of self-employment, the responsibility of securing the future of your loved ones falls on your shoulders. A term insurance plan can ensure that you create a corpus for your family for a time when you may not be around. This can help them cover their expenditure in the absence of your income.

2. You may not have a steady flow of income: Self employment may not offer you a stable income at all times. Whether you are running your business or working as a freelancer, your income can vary for different months of the year. In this case, low income months can make it hard to save. As a result, your savings can be inconsistent. However, if you invest in a term plan, you are liable to pay regular premiums to keep your insurance policy active. If you fail to pay the premiums, your policy can lapse. This acts as a deterrent and ensures that you pay your premiums, which in turn keeps your family financially protected. Moreover, since the premiums for term plans are quite affordable, you can secure a significant sum assured at very low costs even during times of low liquidity.

3. You can experience hardships in the informal sector: Being self-employed can be hard in today’s times. The informal sector is more susceptible to the fluctuations in the economy and the market. The Covid-19 pandemic is proof of how self-employed people struggle to keep their incomes consistent in the face of lockdowns. Many people were also forced to turn to loans. In the unfortunate event of your demise, the liability of settling your debt can come to your family. The sum assured from a term insurance plan can provide your loved ones with the means to repay your loans.

term insurance plans for self-employed individuals by Kotak Life

Here are some term insurance plans by Kotak Life for self-employed individuals:

Kotak e-Term Plan

- Minimum sum assured starting from ₹25,00,000.

- Higher limit for the sum assured can be decided depending on the plan.

The plan’s premiums start at ₹23 per day. This is suitable for self-employed people regardless of their income.

To sum it up

term insurance for self-employed individuals can have a wide range of advantages. It can offer your family financial stability, and at the same time give you peace of mind that your loved ones will be protected against financial hardships in your absence.

- A Consumer Education Initiative series by Kotak Life