Why Is Life Insurance Important for Self-Employed?

A person counting money

Introduction

The digital era has created a new wave of entrepreneurs and self-made individuals who are starting their own businesses. But running a business can be risky, and there are various matters involved that require you to have the necessary measures to deal with any financial ramifications. The best life insurance can help deal with any such issues:

Replacing Income Temporarily

Premature death can take an emotional toll on everyone, but it also heavily affects finances. People that rely on you for your financial support will be in a tough spot, especially if you don’t have life insurance. It’s true that life insurance isn’t the same as a direct source of revenue, but the death benefit can help your loved ones deal with some of the financial ramifications for the time being.

It’s a great way of bridging the gap and cushioning the financial damage that occurs after one’s passing. The insurance payout helps in difficult times when people will need time to grieve and assess future decisions.

Dealing with Small Business Loans and Debts

It’s common for self-employed people to take out small business loans. Life insurance policy payouts can play a big role for your family members or business associates to pay off any such debts. You’re allowed to borrow against the policy to pay off different business-related expenses in case your permanent life insurance is accruing cash value.

A person going over debts

The payout from your life insurance policy can make a lot of difference for your loved ones. It can help pay off outstanding debt such as credit card loans or mortgages. Ensure that your family doesn’t end up having any place to live by having proper measures in place in the event of your passing with the support of a reliable life insurance company.

Your Heirs Could Inherit Your Debt

It’s not uncommon for self-employed people to connect business with their real estate, especially when they put up their property or assets as collateral. While the main goal of this is to pay the money back right away, this process can take up time depending on how business goes. These debts don’t disappear after your passing but actually get passed on to your family. Debt can often be a cost of business, but family life insurance payout can help take care of this amount.

You Need A Successor

After your passing, it’s more than likely that someone in the family will take over the mantle or hire someone else to run the business. Similarly, it might take a new person on the job some time to get acclimated to the work, regardless of whether it’s a family member or a hired resource which can take up extra costs.

The uncertainty can bring up many unexpected costs that life insurance payouts can take care of.

Term Life Insurance

Term life insurance is limited, ranging from 10 to 30 years. Because it’s for a limited period, it’s much more affordable in general. But the downside is that you have nothing once the policy period is over.

The other problem is that getting a new policy as you’re older becomes less convenient due to the higher costs depending on your age, profession, gender, and any health conditions. Term life insurance policies are more popular among younger people based on this aspect.

Permanent Life Insurance

As the name implies, permanent life insurance doesn’t expire and is set for life. Not only does permanent life insurance come with numerous benefits, but you’re allowed to borrow against it, which many people opt for. Many people take advantage of the fact that you can borrow tax-free from the policy, which many people do on a regular basis, while others let it be until it’s required after they retire.

The downside is that you pay a higher premium. The loans you’ve taken from the policy are paid off from the death benefit, while the rest of the funds are given to the decedent’s next of kin.

Work with Us

Being a self-employed individual comes with a lot of freedom but also requires you to pay attention to many aspects of finances. Ensure your loved ones and your business are taken care of after your passing. Work with a life insurance agency that can help prepare for any issues that await you. Get in touch with us at Franklin Life & Annuity right away. If you need life insurance for the entire family or require final expense insurance, our services can assist you.