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Call Us NowRequest a Free QuoteLife insurance for self-employed people replaces the group coverage an employer might otherwise provide. Without it, your family could face an income gap, your debts and any business loans.
For most self-employed workers, term life is the simplest, lowest-cost place to start. Below, you'll learn how to size a policy, compare term and whole life, and buy with confidence. Questions? Call 888-730-6031.
- Self-employed people don't get group life insurance through an employer.
- Term life costs less and covers a set period, such as 10 to 30 years.
- Size your policy to your income, debts, business loans and family goals.
- Life insurance death benefits are generally not taxable income for beneficiaries.
- Some term policies can later convert to permanent coverage.
Why Do Self-Employed People Need Their Own Life Insurance?
When you work for yourself, no employer adds you to a group life plan. That's the main reason life insurance for independent contractors is a do-it-yourself job.
So, if your family depends on your income, you have to buy that protection on your own.
Ask yourself one simple question first: how much of the household income do you provide? The NAIC's life insurance guide suggests starting there. If the answer is "most of it," coverage matters.
Our pillar guide to choosing a life insurance policy covers the basics. For more on timing, read when and why you need life insurance.
Term or Whole Life Insurance for Self-Employed Workers?
Term life fits most self-employed budgets because it costs less for the same death benefit. Whole life costs more but lasts your whole life and builds cash value.
| Feature | Term life | Whole life (permanent) |
|---|---|---|
| How long it lasts | A set period, such as 10, 15, 20 or 30 years | For life, as long as premiums are paid |
| Cost | Lower-cost coverage for a specific period | Higher premiums because of the savings part |
| Cash value | None | Builds over time |
| Common use | Income years, mortgages and business loans | Lifelong needs, such as final expenses |
Sources: NAIC life insurance consumer guide and our term life insurance guide.
Term coverage can often be renewed, but premiums may rise at renewal. Also, some term policies let you convert to a permanent plan later. Read about what happens if you outlive your term, or see the benefits of whole life coverage.
How Long Should Your Term Be?
Match the term to your longest major obligation. For example, a 20-year mortgage or a child who is five years old may point to a 20-year term.
Many people choosing term life for freelancers or contractors pick a term that ends near retirement. After that, savings may replace the need for income protection.
How Much Life Insurance for Self-Employed People Is Enough?
Add up what your family would need, then subtract what you already have. Some experts suggest five to eight times your income, but a simple worksheet is more accurate.
| Need | Example amount |
|---|---|
| Income replacement ($60,000 net profit × 10 years) | $600,000 |
| Mortgage balance | $220,000 |
| Business loan balance | $30,000 |
| Children's education goal | $40,000 |
| Final expenses | $15,000 |
| Minus savings and existing coverage | −$25,000 |
| Estimated need | About $880,000 |
Illustration only, not a quote or recommendation. The NAIC lists income, debts, final expenses and education as key factors.
Use your net profit, not gross sales, since that's what your family lives on. Then round to a policy size you can keep paying. Our guide on choosing a coverage amount goes step by step.
A licensed Vivna agent can size a policy and compare term options at no cost. Call 888-730-6031 or request a free quote.
Can Life Insurance Cover Business Debts?
Yes. A death benefit can help your family pay off business loans, equipment leases or a personal line of credit.
That's why life insurance for sole proprietors matters, since business and personal debts often overlap. So, list every loan you've signed for personally when you add up your need.
- Equipment and vehicle loans: trucks, tools or machines your business still owes on.
- Lines of credit: balances that could fall to your family or estate.
- Partners: if you co-own a business, ask an attorney how a buyout would be funded.
How Do You Buy Life Insurance for Self-Employed Work?
Start with a licensed agent and a company you trust. Then review your application carefully before you sign it.
- Check licenses: your state insurance department lists licensed agents and companies.
- Answer every question accurately: mistakes on an application can cause problems later.
- Pay the company, not the agent: the NAIC advises making checks payable to the insurer.
- Buy what you'll keep: dropping a policy early can be costly.
- Compare carriers: premiums and underwriting differ from one insurer to the next.
For life insurance for self-employed clients, Vivna offers term and whole life plans from carriers such as UnitedHealthcare and Aflac. For example, UnitedHealthcare Term Life SafeGuard offers 10- or 20-year terms from $25,000 to $200,000. Learn more on our term life insurance page.
Self-Employed Life Insurance FAQs
Is a life insurance payout taxed for my family?
Generally, no. The IRS says life insurance proceeds paid to a beneficiary because of the insured person's death usually aren't taxable income.
However, any interest paid on top of the benefit is taxable, per the IRS life insurance proceeds FAQ. Talk to a tax professional about your situation.
Do I need a medical exam to get term life as a freelancer?
It depends on the policy, your age and the coverage amount. Some policies ask health questions only, while larger amounts may need more underwriting.
An agent can tell you which path fits before you apply. That way, you know what to expect and how long approval may take.
Should I buy life insurance through a professional association?
It can be one option, but group coverage may end if you leave the group. An individual policy you own stays with you as long as you pay.
Compare the price, the term and what happens if you change careers. Our life insurance FAQ library answers more questions.
Next Steps for Life Insurance for Self-Employed People
Life insurance for self-employed workers protects the income and debts your family depends on. First, total your need with the worksheet above. Next, compare term lengths that match your loans and your children's ages.
Ready to compare? Call a licensed Vivna agent at 888-730-6031, Monday through Friday, 9 a.m. to 6 p.m. Eastern. You can also browse our affordable life insurance plans.
Sources
Related Guides
- Choosing a life insurance policy
- Why term life matters for families
- Self-employed health insurance
- Term life insurance FAQs
About the author: Marlon Mills
Marlon is Director of Sales at Vivna Insurance, a licensed independent agency in Deerfield Beach, Florida. He has about 20 years of insurance experience and helps families compare health, dental and supplemental plans. Licensed health insurance agent, Vivna Insurance (Agency NPN 19168641). Call 888-730-6031.
Reviewed by Heather Sprague, licensed health insurance agent.
Vivna Insurance is a licensed independent agency, not a government website. Our help is free; we are paid by the insurance companies we work with. Life insurance approval and premiums depend on underwriting. This article is general information, not tax or legal advice.
Find Local Health Insurance Help
Plans, prices and help programs change by state and even by county. These local guides show what is available near you.
More local help: the Arizona health insurance guide, plus guides for Florida, Texas, Georgia and every state we serve.
Prefer to talk it through? Call 888-730-6031 Monday through Friday, 9 a.m. to 6 p.m. Eastern, for free help from a licensed agent.
