Life Insurance for the Self Employed
It usually happens that many people who are self employed usually don’t have life insurance coverage. This is because these people forget that they are no longer being trapped in financial circle. This brings them to think that a long term life insurance is no longer useful and important to a rich person. This is, however, a mentality that ought to be abolished.
Why?
This is because a life insurance policy is still beneficial to a person who has strong financial backing or is self-employed.
Let me explain why, when a person is self-employed, he has a strong tendency to be confident of his financial status. Thus, he feels that he needs no form of financial help from anyone else. This brings about that buying an insurance policy will be the last thing on his list. He forgets that he needs to maintain his financial assets in order to maintain his current financial status!
Here is a point of thought, what if this person who is self-employed has physical conditions or illness that might disrupt his work flow? In short, he might find that it is quite hard or is not possible to maintain his business? Or even his regular day-to-day activities that might just prove to be an obstacle to prevent him from turning up at work?
Yes, a life insurance policy becomes handy at this point of time. A rich person might say, “Come on, all these unfortunate events happen so remotely! It won’t happen to me!” That is why many of these self-employed people procrastinate buying an insurance policy and end up in a sorry state later.
In fact, as a person who is standing from a greedy perspective, the most important thing for a self-employed person is to buy the best life insurance policy that do not even cater to his needs! Why? In order to make sure the business is running well, there is a need to make sure that he is covered from head to toe so that he doesn’t need to worry about losing any of his amenities should he be unwell to attend to his work.
A self employed person might also want to consider purchasing a huge life insurance policy for his beneficiaries so if any case that he dies intestate, his heirs still will have a large sum of money.
So, what if the self-employed person falls ill with a terminal illness suddenly?
Terminal illnesses come in many forms, and they do not only devastating physically, they cause a lot of agony and pain to the person. Cancerous cells may appear in your body at any moment of your life. Or maybe, this self-employed person travels abroad and ends up infected with Severe Accurate Respiratory Syndrome (SARS), he will be unable to attend work for a very long period of time.
To a rich man, he spends money to save time. And to a poor man, he spends time to save money. From this, we can see that time by itself is a very important asset to a busy, rich man. In order to save his precious time, taking good care of his own health is of top priority to maintain his wealth.
Lastly, a good reason for a self-employed person to purchase life insurance is because he might be involved in an unfortunate traffic accident. Yes, I have to agree again that such incidents only happen to the minority. But, there is still a slight possibility of it to happen, correct?
This may sound awful, but all you need is just one single unfortunate incident for a self employed person to lose his amenities, financial status and his confidence. Although a life insurance policy does not restore the confidence of a person who is involved in a serious accident, it does prove to be of great assistance to pay for all the costly hospital bills which may be too immense.
A good life insurance policy covers a self-employed person from head to toe. However, it may be a bit challenging for self-employed person to buy a well-covered life insurance policy sometimes as his health condition might have deteriorated.
A self-employed person should take some reasonable effort to make sure he is in good health. Before buying a life insurance policy, the self-employed person should make a trip to the doctor’s and have a full-body checkup for any ailments. Usually, when a self-employed person has a certain negative health condition, the insurance company is less likely to cover him. In order for a life insurance policy to be granted successfully, it is wise to declare all negative health conditions.
Besides, a life insurance policy is valuable should a person leave his family members suddenly due to an accident. I know of one guy who left all his family members behind as his motorbike had a severe collision with the local school buses! He didn’t buy an insurance policy. So, his wife had to pay for all his funeral expenses. Currently, his wife is taking on three jobs to support their children through high school! This is a really unfortunate incident and I sincerely plead the self-employed people who are reading this to start taking action by buying an insurance policy that caters to your needs. You don’t want to see your loved ones suffering, do you?
How Much Life Insurance Do You Need?
It’s too morbid to talk about life insurance. It’s never pleasant thinking about how life would be for you if you lost a loved one, however, things do happen every day and the statistics don’t lie. You have to accept that it’s simply a fact of life. At some point in our lives this is something that many of us will have to go through and overcome it. Doesn’t it make sense to be ready and well-prepared for it rather than be a sitting duck when an overwhelming situation happens?
Before buying life insurance from any insurer, you should ask yourself, “how much do I need?” If you could answer this question, life insurance shouldn’t be that complicated and you should be able to choose your ideal policy easily. It’s never a bad thing to buy too much but don’t be surprised if unexpected expenses stacks up. The amount that you’ll need to purchase is going to depend on several critical factors such as whether the person being insured has a family or not. Let’s take a look at a few things to consider how much life insurance you need.
You should look at your current and future needs. If you have a young family or a spouse that is dependent on your income to live, it’s a better choice to buy a life insurance that could cover your small family and spouse for at least 20 years or more. Some people would tell you that it’s better off over insured, then not having enough insurance. Many experienced insurance professionals state that you should have at least a life insurance policy of 14K to cover the final expenses. You should also purchase life insurance by multiplying your salary. For example if you earn 5K per month, you should buy an insurance policy of at least 25K.
Other insurance professionals also suggested that you should look at your family average expenses for the amount of years that you want to get them covered and figure out how much money they need to continue living comfortably. There is a formula used by life insurance professionals to figure out how much insurance you need for your age and level of converge for your family. In the event of death, this can be a huge burden for your family members. They not only have to go through the grief of a lost precious one, but also the added financial burden that was placed on them suddenly. I’m sure many people want to make sure their family could continue and maintain their living standards in the event of death. Things to consider are the cost of your current home, car loans, and maintenance of assets, education costs for children and basic utility costs. Usually the more they depends on you, the more insurance is necessary.
It’s important to have enough coverage in order to repay any outstanding debt that you may have, especially if you’ve had someone co-sign on a loan for you as they would be fully responsible for repayment in the event of your death. If you are single, do not have any dependents and have a sufficient amount of savings to take care of your final expenses, then you might want to consider whether you want to buy life insurance in the first place.
One thing is for certain, make sure you put lots of thought into the amount of life insurance you do purchase and talk to a financial planner, accountant or insurance agent to learn more about how much life insurance, you personally should purchase.
There are many more questions you would need to ask yourself here, but let’s just assume that you are the sole breadwinner and your wife works part time as she is a housewife for the rest of the time. Let’s also assume that you have three children. You have a mortgage, auto payment, some credit card debt and have financed some renovations.
Let us keep this as simple as possible because each person’s situation is going to be different, but in this case, you would need enough coverage to support your wife and children at least until the kids turn twenty. You’ll also need slightly more than enough to repay any personal debt that you currently have. You could purchase a separate decreasing Term Life policy to pay off any outstanding debt that you may have.
You have read this far and if you don’t have any insurance now, you may have just received a slap back into reality. It takes a lot of hard earned money to pay for our most basic daily, weekly and monthly expenses. However, do you have the coverage that you would need to have in the event of an unexpected disastrous event? Here is something for you to think about.
When to Buy Life Insurance
Should you buy life insurance now? Do you even need life insurance in the first place? These are the questions that you need to ask yourself when deciding to buy life insurance.
Well, everyone needs life insurance because of the death benefits- the sum of money could do something to lessen the financial burden of your loved ones if anything happens to you. To answer your question, it’s probably the best time to buy life insurance now because as you get older the same policy you would buy today will cost you much more. Life insurance companies have huge data to gauge how many people at a given age are going to die within a year and they even know how many will be alive and kicking the next year this time. Of course, many of us won’t want to think about the possibility of death but if we give this serious matter some thought we realize that the best time to buy term life insurance is today.
Why do I emphasis on term life insurance? Term policy is a popular choice for young adults and families because term policies are much more affordable than permanent policies. Anybody with some income and qualifies for certain criteria can start buying term life insurance right now.
Most of the permanent life insurance policies such as whole life, universal life or variable universal life are too expensive for many people so many people have chosen to take up a term policy instead. The best type of term life insurance for you depends on the number of years you need to keep the policy. Most level term policies are available for 10 years, 15 years, 20 years, 25 years or 30 years. The shorter the policy’s term, the lower the premium. I would suggest you to buy your policy as soon as possible because you are at the healthiest moment now so that the cost would be much lower. If you happen to fall ill next year, you would even need to pay double the premium amount.
However, if you decide to go ahead with permanent life insurance, you should take up the variable life policy because it’s an insurance policy and an investment tool merged into one. Insurers would use your sum of money to invest in a wide variety of low-risk financial instruments such as futures and options to diversify across your portfolio. It could be a good way to invest and make some money while the money is sitting inside there. Some insurers even guarantee not to lose away your death benefit even if your investments failed badly. Think about how much money you can save if you start to buy insurance now.
I have spent many years in the life insurance business and I can tell you many unfortunate but delightful, in a way, true stories about people who did not procrastinate to buy their life insurance. These stories are unfortunate because someone died but they are delightful in other ways. The death benefits paid off the outstanding debts and loans that they were struggling with. The children could continue going to the school and the surviving spouse could send them to school every morning in the same car. The big sum of money needed to take care of final expenses was more than enough.
Life insurance plays a big part in replacing income for dependents because life insurance can replace that income gap if you die. It could affect your parents who are 100% dependent on your monthly contribution, siblings who needs a loan from you to further study, children who needs to attend school every day and other few loved ones to rely on you financially. Even worse, the government or employer-sponsored benefits of your surviving partner will likely to be reduced to a dime after your death. When you think of buying life insurance at that time, it’s already too late!
The other side of the coin is rather dirty and ugly. I could tell you many real life stories about many people who died without sufficient life insurance and what happen to their loved ones but I won’t. Do you know that life insurance reimbursements could also pay for estate taxes so that your family would not have to settle other assets or take a minor inheritance? Changes in the federal “death” tax should lower the impact of this tax on some people but some states have increased their state-level “death” taxes in response to the decrease of federal “death” tax.
The best time to buy life insurance is right now because the rising inflation would definitely make the premium go higher every year and the value of your policy would multiple easily just after a few years. I urge you to stop procrastinating and do the smart thing today.