These are trying times. Diseases turn into pandemics. Accidents happen every 2 hours. While most people are engrossed in their phone screens and social media, disabilities and untimely demise have become commonplace due to overlooking safety standards.
Everything is now a safety hazard, but that doesn’t mean you need to give up on your way of life, business, or family’s lifestyle. That is why there are term insurance plans, a boon that helps protect your interests during your life and takes care of your family in case of your untimely death.
What are the different types of advantageous term insurance for self-employed?
Term insurance comes in many forms. Here are the selections you need to keep in mind to make an informed decision:
- Endowment Plans:
These are beneficial term insurance for self employed people as the premium paid earns interest. In case of early death, the family receives the sum assured, but if you survive the tenure, you get your premiums with a rate of interest.
- ULIPs:
With ULIPs, your premiums are invested in the market. That way, you receive a certain amount of interest from your investments monthly, quarterly, or yearly. It is a life insurance plan that pays death benefits to your family and allows you to enjoy your money during the tenure of your term insurance policy.
- Increasing Term Insurance:
In this term insurance for self-employed, the sum assured increases every year. You need to determine the percentage increase as well as if your rate of premium will remain the same with every increment.
- Decreasing Term Insurance:
These policies usually offer loan benefits. Every year, a certain sum of money is set aside from your sum insured to repay the loans. That way, in case of an unfortunate death, your family will have fewer loans and mortgages to pay with the death benefit that they receive.
- Money-back plans:
These term insurance for self-employed are highly beneficial as they pay you a predetermined sum of money at regular intervals during the tenure of your policy. The remaining sum from your premium is settled if you survive the tenure. However, in cases of untimely death, the family still receives the entire sum assured.
- Term Insurance with Return of Premium:
If you survive the tenure of your term insurance plan, then all the premiums you paid over the years are returned to you.
How to choose the best term insurance plan for you and your family
There is a myriad of options to choose from, and sometimes it can be overwhelming to decide which term insurance for self employed individuals best suits your needs and that of your family. Here are a few easy steps to follow:
- Start by determining your family’s financial needs. Factoring in an average rate of inflation, how much sum assured do you believe they would need to pay the bills, mortgages, loans, etc., as well as maintain the household for a couple of years at least? You need to plan for a little extra time because it would take a while for them to find a different source of income.
- Next, you need to consider the tenure terms. If you don’t see an immediate danger, then you can fix term insurance for self-employed with a longer tenure. However, if you are boggled by the uncertainties of life and the dangers of accidents, diseases, etc., you can choose a shorter tenure. After all, the beauty of term insurance is that you can insure yourself anywhere from 10-100 years at a reasonable premium rate. You can use a term insurance calculator to determine the tenure based on your sum assured and the rate of premium you find feasible.
- Speaking of the premium rate, if the tenure and sum assured are your priorities, feed those into the term insurance calculator to determine the premium you will need to pay.
- Now, consider your lifestyle and habits. How likely is it that you may develop a chronic illness? If you feel that the threats of chronic diseases are looming over your head, look into add-ons or riders that offer relief in such cases. You can add the clauses to the term insurance calculator for a revised premium rate.
- After taking care of the necessities, consider if you want to keep earning money from your term insurance plans. Yes, that is a feasible mode of income and a real possibility. All you need to do is consider the available types of plans and opt for ULIPs, money-back plans, or endowment plans. These offer real-time returns on your premium investments. Therefore, you get to enjoy the money you put aside during your life.
- You can also opt for increasing or decreasing term insurance plans for self-employed. These either help your family in case of early, unfortunate death, or they help you relieve yourself and them of loans.
- One of the best term insurance for self-employed is the return of premium. If you survive the tenure of your term insurance plan, you get back the entire money you invested in premiums. You can use the funds to reinvest in another term insurance plan, opt for market investments, pay your loans and mortgages, or start a fund for your children’s higher education or wedding. You can do whatever you need to to relieve financial stress.
Use a term insurance calculator to determine the premium you will be able to pay and modify the nuances of your policy accordingly. If paying the premium isn’t such a big headache, opt for as much coverage as possible. You will be surprised at how many benefits you and your family can get from thorough financial planning with term insurance for self-employed.
Conclusion
Self-employed individuals have massive responsibilities without a fixed and steady source of income from jobs. It is not a disadvantage, but rather an opportunity to plan your life and that of your family’s with returns on investment.
Choosing the right kind of term insurance plan enables you to increase your monthly income with ULIPs or periodic income with money-back plans and endowment plans. Even the decreasing term insurance for self-employed inadvertently increases your income by reducing your debt. On the other hand, increasing term insurance helps secure your family’s lifestyle. And let’s not forget that if you live a healthy and careful life, you could get all your investments back if you have term insurance with a return of premium.
So, consider your finances, use a term insurance calculator, and determine the best term insurance for self-employed individuals to maximize your benefits.
