
<p>Whether one is employed in a company or has a business, they need to have a life insurance policy to make sure their loved ones are able to meet their fundamental needs in their absence. However, there is a misconception that only those who work in a company and are salaried are eligible to get a life insurance policy. Does it mean self-employed people can&#8217;t get one? The short answer to this question would be &#8216;Sure, you can.&#8217; Your monthly revenue could come from your business, rentals, or any other work that you do. In this article, we will try to understand how one can get term insurance for self employed and protect their loved ones financially. ;</p>



<h2 class="wp-block-heading"><strong>First, understand how is life insurance eligibility determined.</strong></h2>



<p>A person&#8217;s human life value determines his or her eligibility for term insurance. For those who are unversed, Human life value (HLV) refers to the potential financial value that the person in question will bring to the family. The presence of a formal income (salary from your job) allows life insurers to more easily evaluate your HLV. However, when income and life circumstances change, the premise of HLV expands to cover the value of work and wealth.</p>



<p>For example, if you are employed and earn Rs. 10 lakhs per year, your maximum life cover eligibility is Rs. 1.5 crore. If you do not have an income, as a homemaker, HLV serves as your family&#8217;s replacement cost. Similarly, if you have additional sources of income, such as interest or investment income, you can use that to determine your HLV and get <a href="https://www.hdfclife.com/term-insurance-plans/term-insurance-for-self-employed"><strong>term insurance for self employed</strong></a>. ;</p>



<h2 class="wp-block-heading"><strong>Why Should You Invest in Life Insurance if You&#8217;re Self-employed?</strong></h2>



<p>Term insurance plans can be used not only to protect your family&#8217;s financial future against unforeseen events but also to make investments. Aside from term insurance, which is purely a protection plan, all other life insurance policies can help you achieve a variety of financial objectives.</p>



<p>There are certain life insurance plans that provides both protection and investment opportunities. For example, consider the child&#8217;s higher education and their marriage goals. Both goals represent significant milestones in your child&#8217;s life. With term insurance for self employed or other insurance plans as investment choices, you can ensure that your child can achieve these objectives even if you are no longer there.</p>



<p><strong>Therefore, life insurance can serve two purposes:</strong></p>



<ul class="wp-block-list">
<li>Financial protection against unforeseen events</li>



<li>Long-term investment to achieve essential financial goals</li>
</ul>



<p>Investing in <a href="https://www.hdfclife.com/term-insurance-plans"><strong>term life insurance plan</strong></a> does not require a job or direct income. You can purchase term insurance for self employed but you must have a source of income to pay your insurance premiums.</p>



<h2 class="wp-block-heading"><strong>Which Life Insurance Plans Should I Invest In and When?</strong></h2>



<p>Depending on your financial objectives, you can invest in the following three types of life insurance policies:</p>



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<li><strong>Unit-Linked Insurance Plans (ULIPs): </strong>Unit-linked insurance plans are the most versatile investment plans offered by life insurance providers. The distinguishing feature of ULIP investments is they allow you to invest in numerous asset types, including equities, debt, and liquid funds, at any ratio. You also get the option to switch between asset classes manually or using automatic portfolio management solutions. Because of these characteristics, ULIPs are the most effective long-term wealth-building investments. A ULIP plan allows you to automate your investment and portfolio management while allowing your money to grow over the investment period. You can also use ULIPs as a pension plan by selecting the systematic withdrawal option in the plan. The systematic withdrawal option in ULIP allows you to withdraw the plan&#8217;s accumulated corpus as a monthly income.</li>
</ul>



<ul class="wp-block-list">
<li><strong>Annuity Plans (deferred and immediate annuities): </strong>Life insurers provide two types of annuity programmes: deferred annuities and immediate annuity plans. These investment plans are often known as pension plans because its principal goal is to provide a monthly pension. If you are contributing to retirement solutions such as the National Pension Scheme (NPS) or the Employee Provident Fund (EPF), you must invest a portion of your funds in one of the annuity plans. Annuity plans allow you to generate a secure and dependable long-term annuity out of your retirement savings. If you are investing for retirement and want to start receiving your pension right away, an immediate annuity is the answer for you.</li>
</ul>



<p>However, if you wish to invest now and start your pension later, you can choose the deferred annuity option. In addition, unlike ULIPs, monthly pension plan income is taxed as salary. Thus, adding ULIPs to your retirement portfolio early on will assist you lower your tax burden after retirement.</p>



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<li><strong>Guaranteed Savings Plan: </strong>Guaranteed savings plans, as the name implies, are the safest long-term investing option in life insurance. You may even get the option to calculate the maturity value of a guaranteed investment plan before you begin investing. Because these plans are among the safest investments, you can utilize them to achieve goals that cannot be compromised in terms of their worth. For example, consider your child&#8217;s marriage goals. Marriage is one of those financial goals where you should spend only what you have and avoid going over budget. However, you do not want to miss out on the celebrations. As a result, the ideal option for achieving this goal is a guaranteed savings plan that allows you to establish a maturity goal in advance.</li>
</ul>



<h2 class="wp-block-heading"><strong>What Documents Are Required to Purchase a Life Insurance Plan for Self-employed Professionals?</strong></h2>



<p>When purchasing a term insurance policy, you will be required to provide a few necessary papers. To avoid policy rejection, ensure that you supply the insurance provider with accurate information and paperwork.</p>



<p>Here&#8217;s a list of documents you should keep handy (anyone):</p>



<ul class="wp-block-list">
<li>Last two years&#8217; income tax returns. Ensure that the returns are not filed in the same year as the income computation.</li>



<li>If the computation of income statement is not accessible, you should have the last three years&#8217; income tax returns. Make sure the returns are not filed in the same year.</li>



<li>CA-certified audited balance sheets and profit and loss statements for the previous two years.</li>



<li>Form 26AS contains information about TDS or TCS from a taxpayer&#8217;s numerous sources of income.</li>
</ul>



<h2 class="wp-block-heading"><strong>At last,</strong></h2>



<p>Running a business has its own challenges. With the help of the right life insurance policy, you will be allowed to take a backseat and focus on your business while protecting your family. One should remember, a life insurance policy is intended for everyone, whether you are a salaried professional or self-employed. Term insurance for self employed serves as a cushion for your family members in the event of an unanticipated incident.</p>

Self-employed? Here’s how to get term insurance
