“You don’t buy life insurance because you’re going to die, but because those you love are going to live.” I’m not sure who said that but I have to agree with it.
As a self-employed individual, you likely have your own business or career that generates income. You may also know yourself as someone who is always in control of his/her emotions, so much so that it’s difficult to tell when you are about to lose your cool.
In fact, one could make an argument that having control over your emotions is what makes you successful.
You see, money is a very powerful force. It can motivate you to do good things, like helping others by donating to charities or saving for retirement.
Or it can pull you into bad habits, such as buying expensive junk food or shopping sprees. Either way, too much money can be a problem.
Self-employment means there’s no boss telling you how to run your company. But that comes with its own set of problems.
If you don’t watch out, money can take over and destroy you. Worse than that, it can hurt those around you.
We all owe a debt we cannot repay for a large part of our lives. This includes credit card bills, student loans, and mortgages.
In addition to this, many people have health insurance through their employers, which oftentimes does not cover everything.
What I am talking about here is life insurance. It is a tool to protect those close to you from being financially ruined if something happens to you.
What Life Insurance is Best for Self-Employed Herbalife Independent Business Owner?
Term life insurance
For self-employed individuals who are looking to place more emphasis on their careers, term life insurance is the best option.
With this kind of coverage, you can pick how long you want to pay monthly premiums before receiving death benefits.
Most people use term life insurance as an asset replacement policy. This means that after paying for your premium-fee period, the rest of the time it stays in effect to help you get through what remains of your business or personal estate.
Since this coverage is meant to last a short amount of time, there are not many restrictions on usage. You can go about your daily affairs while under a term plan.
Whole life insurance
For most self-employed individuals, whole life insurance is the best choice. This type of coverage typically lasts your entire life and can be quite expensive depending on how much you need it.
However, these policies often have loan features that allow you to pay off the policy as you earn more income. By setting up recurring monthly payments, you will also get some tax benefits.
Furthermore, whole-life policies tend to offer greater death benefit savings than other types of coverage. These benefits increase as you use the policy longer, so investing in a long-term policy is important too!
Whole life insurance is usually cheaper at first, but this can be due to higher commission fees. As time goes on, however, the underwriters who assess your policy will recognize you as an intelligent investor and not only give you a better deal, but also lower premium rates.
Universal life insurance
While term life insurance is great, there are times when you need to consider other types of coverage. This is particularly true if your income or lifestyle will rise and fall at different times throughout the year.
A more flexible policy is needed in order to account for this. A universal life insurance policy is just that – one type of policy that can be adjusted depending on your needs.
You get to choose whether to pay for a very small amount of coverage or a large amount of coverage, which is why they’re called “level premium policies.”
The key difference between universal life and traditional life insurance is that with universal life, you own part of the company. So instead of paying an external party to cover certain death benefits, you are!
This helps eliminate issues like moral hazard, where people may be incentivized to keep you alive longer so they can reap the rewards of your money.
It also allows for much simpler estate planning because you don’t have to worry about who gets what. Your loved ones always come first with universal life, which is another reason to consider it.
Modified universal life insurance
While term life insurance is great, it does not work well for some self-employed individuals. Because you are not in employment, there is no one to depend on income when you die.
Term coverage can also be expensive as time passes, making an already costly policy even more so.
A relatively new type of life insurance that has become very popular is modified universal life (MUL) insurance.
With MULs, you get continuous coverage that lasts your lifetime. This means you will not need to renew the policy before it expires like with term policies.
What makes these types of policies different than traditional term or permanent life policies is how they calculate your premium payment. These types of policies do not have a set age limit for coverage.
They instead use what’s called “lapse rate mortality” which bases their cost on whether you die at a young or old age. The older you are, the higher the risk and thus the higher premiums needed.
As mentioned before, life insurance is very important to self-employed individuals because it can help you with your retirement savings. You can use your policy to supplement your retirement income or even be the main source of income in the future.
Many people put off buying life insurance due to the expensive premiums that are attached to each plan. But since you’re not getting paid while you wait to die, these monthly fees are actually being wasted money.
There are several types of policies available to self-employed individuals. The two most common ones are the terms life and universal life.
A term life policy works like normal life insurance – you get paid a certain amount of money when you die. The length of this coverage varies depending on how long you want to protect your family from death.
These plans cost less upfront but require you to pay more to renew your coverage as you grow older. Since you’ll be paying higher annual dues, later on, this gives you more incentive to keep your policy active.
Do I need life insurance?
As a self-employed individual, you may be less familiar with your coverage needs than someone who has an employer that provides benefits. However, to make sure you are protecting yourself, your family members, and investors properly, you must know what types of protection you have and if they are adequate.
It is very important to understand how life insurance works to see whether or not you qualify and what kind of policy would be the most effective. More expensive policies do not always mean better coverage unless you need the money!
A lot of it depends on what you want to protect yourself from. For example, if you wanted to protect your business in case of death, then investing will help, but if you wanted to cover your loved ones, life insurance is more appropriate.
There are several different factors that determine which type of policy is needed, so doing some research can save you time and money in the long run.
Most people agree that the first things to go after your estate are your debts and your children. This makes sense since we all know how expensive education can be and how hard it can be to find good jobs without strong credentials.
Urgent medical bills can put a strain on a family’s finances even years later, making it difficult to recover. For this reason, it is best to leave some money behind for your kids!
The problem is that few people actually include death benefits in their financial plans. Most people think about retirement savings and paying off loans, but little else.
Talk to an insurance agent to know the best life insurance for self-employed you can obtain as a Herbalife independent business owner.