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Life insurance for the self-employed

Protect your family and your business with the right policy.

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If you’re self-employed, life insurance could provide a safety net for your family and the people who depend on your business.

Why do I need coverage if I’m self-employed?

If you’re a small business owner or self-employed, the payout from a life insurance policy could be what your business and family needs to keep it afloat.

Depending on the coverage you choose, your policy can cover everyday operating expenses, pay off loans or take care of real estate taxes and sales. A few reasons you may need life insurance coverage if you’re self-employed:

  • Income from your business pays the bills and supports your family.
  • You want your business to keep running without you.
  • You have debt or real estate connected to your business.
  • You’re looking to help your partners or beneficiaries with a buy–sell agreement or key man insurance.

MUST READ: What is key man insurance?

Key man insurance is a life insurance policy on an owner, founder or key employee of a business. Such people are considered critical to the success of the business — so critical, the business could fail without them.

The business is the beneficiary of key man insurance to help it avoid bankruptcy if the person who’s important to the company dies. If the business closes, the policy payout can be used to settle debts, pay investors and help with selling the business.

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If I die, how can my business affect my loved ones?

Aside from your family depending on your business income — they may also have to figure out how to handle the business moving forward. Here are reasons your family might have to step in after your death:

  • Loans backed by personal assets. If your business loans are backed by personal assets your family could lose their home, cars or any other collateral used to start your business.
  • The sell of your business. If your family has to sell your business quickly because they aren’t equipped to run it, they may be forced to sell it for cheap, or during bad market conditions.
  • Keep your business running. If your family relies on this income alone they may be forced to learn to run the business or assist your business partners during a stressful time.

What type of life insurance policy do I need?

The type of life insurance policy you need depends on how much you can afford. Consider factors like your debt, financial responsibilities and business assets.

Term

Usually a more affordable option, this coverage could be good for those just starting a business with little funds.

  • Choose coverage for 10, 15, 20, 25 or 30 years.
  • Good for younger people in good health.
  • Renew or convert to a permanent policy after your term ends.

Permanent

This coverage lasts as long as you pay your premium and can include:

  • Whole life. As you pay your premium, your policy builds cash value. You can use this cash as a loan if you need it, but it decreases the payout to your beneficiaries.
  • Universal life. Payment flexibility with the option to increase or decrease your payments and change how often you pay. Use the money in your policy for a loan or to cover payments.
  • Variable life. Like universal life, but you can invest in securities like stocks, bonds and mutual funds.

Compare life insurance companies

Name Product Issue age Minimum Coverage Maximum Coverage Term Lengths Medical Exam Required
Sproutt
18 - 60 years old
$50,000
$10,000,000
5, 10, 15, 20, 25 and 30 years
No
This life insurance broker combines technology and the human touch to match you with a policy tailored to your needs.
Bestow
21 - 54 years old
$50,000
$1,000,000
10 or 20 years
No
Affordable 10- and 20-year term life insurance policies with instant quotes and no medical exams.
Policygenius
18 - 85 years old
$50,000
$10,000,000
10, 15, 20, 25, 30 years
Depends on provider and policy
Compare affordable quotes from 12+ A-rated life insurance companies side-by-side.
Everyday Life
20 - 75 years old
$100,000
$10,000,000
10, 15, 20, 25 or 30 years
No
Build a customized laddering strategy to target specific financial responsibilities and save on term life.
Fabric
25 - 60 years old
$100,000
$5,000,000
10, 15, or 20 years
Depends on policy
Get affordable term life insurance with accelerated underwriting or no-exam coverage up to $1,000,000. Available in all states except CA, NY and MT.
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Bottom line

Deciding to get life insurance coverage if you’re self-employed means providing a plan for your business — and your family after you’re gone. Compare life insurance policies to find the right fit for your business and budget.

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