How to Get Life Insurance for Freelancers

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Written By MatthewWashington

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How to Get Life Insurance for Freelancers

The U.S. has 35% of its workforce made up of freelancers, and this number is increasing. They are expected to make up 50% of the workforce by 2020. This is a large number of people who will likely be responsible for their own insurance and benefits management. If you are one of these people, here’s what to do.

Prioritizing Coverage Is Key

Freelancing can present challenges. It can be difficult to have enough income to cover your insurance needs. It’s possible to lose a job or gig that has been your bread-and- butter, which can make it difficult to maintain a consistent budget.

Although life insurance might not seem important compared to other expenses and needs, it is essential, especially if your family is the breadwinner. You want to ensure your family is able to pay any debts and expenses if something happens to you. It is important to assess the insurance needs of your family members and decide what your priorities are.

Professional unions can be useful resources

Freelancers have many resources, such as the National Writers Union and Freelancers Union. These unions provide life insurance plans to their members, as well as lobbying for freelancers’ rights. Unions can offer benefits that are more difficult for freelancers to obtain on their own.

Ask a representative about the health and dental plans available to you. Also, inquire about other insurance options, such as life and disability. You will likely find information about the options in your state.

Spousal coverage can be helpful, but it isn’t always comprehensive

Consider whether your spouse is eligible for dependent coverage through the employer if they work full-time. Before you sign up, make sure to check the cost and whether it is comprehensive. Employer-sponsored insurance plans may add a surcharge for spouses, which could make it too expensive for your household budget. You might still be able to supplement your spouse’s coverage with products that you can buy as an individual like life insurance.

Although life insurance might not seem necessary when you are a freelancer trying budget for your financial priorities, it is an essential part of your benefits coverage. These tips can help you decide what is best for your family.

What is Life Insurance? An Introduction

You sign a contract when you purchase life insurance. The insurance company promises that your beneficiaries will receive a certain amount upon your death. You pay periodic premiums in return. Your age, gender, and dollar amount of your life insurance purchased will all impact the premium amount.

Life insurance pays money to your beneficiaries in the event you die. The money can be used for:

  • Make up the difference
  • Finance of a child’s education
  • Repaying household debt

You can pay for your funeral and any other expenses.

Some types of life insurance can provide benefits to you and your family while they are still alive. Permanent life insurance, for example, has a cash value component that can be used throughout your lifetime.

There are two major types of life insurance

Term life insurance provides protection for your loved ones over a set time frame, usually from one to twenty years. The insurance will cease if you stop paying your premiums. Term policies provide benefits in the event that you die within the policy’s coverage period. However, they don’t build cash value.

Permanent life insurance policies don’t expire. They are meant to protect your loved ones forever, provided you pay your premiums. These policies can accumulate cash value. Find out more about the differences between whole and term life insurance.

What amount of life insurance do I need?

You should aim to create a life insurance policy (through one or more policies), that compensates you for your economic loss. There are two options to help you determine the amount of life insurance that you might need. Discuss your options with your financial advisor in order to determine the best way for you.

Need for replacement income

This method is well-known and can be used to determine the financial contribution that you can make to your family between now and retirement. This is more than replacing your income. It accounts for all you provide for your family.

  • Salary
  • Benefits/health insurance
  • Retirement savings and 401(k).
  • You provide personal services for your family such as cooking, childcare, and home maintenance.
  • Your personal consumption is less–annual spending on personal necessities such as entertainment, clothing, and food.

Analysis of the needs of survivors

This method is based upon replacing the income that your spouse and children need to have a desired level and lifestyle. To determine the need for additional life insurance, your survivors’ needs will be compared with their assets, current life insurance and income sources. A financial advisor or insurance professional can help you to determine the right coverage and figure out how much.

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