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As India is moving towards new economic encouragements, growth, and development, the rising need for self-employment is becoming the truth of India. Being self-employed means everything depends on you and it is difficult to take off even for one day from work. What if serious disease or injury prevented you from working and you have no savings? How would your business grow and how you will lead your life? People with disability or diseases can choose from a variety of term insurance plans to meet their requirements.
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Note: Know more about what is term insurance first before reading this article.
Let’s discuss the disease and disability under the term insurance coverage for self-employed:
Term Plans
Term life insurance is a contract between an insurer and a policyholder where a specific amount of money is paid to the life assured’s family by the insurer in case of the policyholder’s unforeseen demise.
Unlike the corporate sector, self-employed individuals do not have a company to provide insurance coverage. These businesses require a good amount of money for their expansion. A loan availed for business growth requires to be repaid, even in the absence of the person. A term insurance plan offers financial protection to safeguard the financial interest of your loved ones and helps in fulfilling their life goals.
Disability Insurance, as the name implies, is a type of insurance plan that pays out if a life assured is not able to work and earn an income because of a disability. In case of a disease or accident, such policy protects you financially if as a result, you become disabled. It can replace a part of the income if the policyholder is not able to work because of their medical condition. The disability insurance plan will also provide coverage for medical bills of the treatment, depending on the term of the policy.
For a self-employed person, disease disability insurance provides coverage of the following:
A weekly benefit is offered as compensation for the loss of income because of short-term impairment up to the policy term when the benefits are payable.
In case of a disability caused by an accident, the policyholder will receive a specific % of the amount covered, depending on the terms and conditions of the accidental disability insurance.
This insurance plan also provides a waiver of premium benefit as part of the basic cover.
Some of the conditions considered as a disability such as low vision, blindness, hearing impairment, leprosy, mental illness, and others.
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You may not have an employer-sponsored plan: People working in the formal sector receive various benefits such as employer provident funds or pension plans. In the case of self-employment, the responsibility of protecting the future of your family is on you only. A term plan helps you create a corpus for your family in a case when you are not with them. This helps them cover their expenses in the absence of any earnings.
You may not have a steady income: Self-employment not always offers you a stable income. While running your own business, your earnings can vary for the different times of the year. The months having low income are the difficult times to save money, thus your savings become irregular. However, if you opt for a term plan, you are eligible to pay regular amounts of premium to keep your policy in force. In case you fail to pay a premium, the policy can lapse. The term plan premium rates are quite pocket-friendly and you can easily secure a significant amount i.e., sum assured at low premium rates even during low liquidity times.
You can experience financial hardships: Self-employment is difficult in these times as this sector is more vulnerable to fluctuations in the market and the economy. In COVID-19, most entrepreneurs have struggled to keep their earnings consistent and most of them have been forced to avail themselves of loans. The sum assured amount from a term plan can offer your loved ones the way to repay your loans.
Note: You can easily calculate the term plan premium by using the term insurance calculator online tool.
The right term insurance cover should not only provide adequate life cover to your loved ones but it should also be convenient to avail of all the term insurance benefits they deserve. Below are the critical factors that should be taken into consideration while looking out for insurance plans for those who are self-employed:
Scope of Coverage: The coverage offered by the term insurance plan should be adequate for offering complete support to the financial goals and objectives. The absence of a monthly or regular income does not confirm the creation of a regular-term savings corpus and thus, it is necessary that the selected insurance plan must have a fixed aspect of savings as well as have the option to extend the flexibility of plans.
Additional Riders: The plan should provide additional coverage under the plan. These plans must offer flexible coverage benefits and the policyholder have the option to choose additional benefits in form of riders like critical illness, accidental death, disability, and waiver of premium.
Critical Illness: The rider provides coverage for the mentioned critical illnesses in the policy document
Accidental death: The rider covers the death due to an accident
Disability: The rider provides coverage for the disability due to an accident
Waiver of Premium: This rider provides the option to waive off all the future premiums in case of disability or diagnosis of a critical illness ailment.
Life Cover with in-built Terminal Illness: This cover ensures low premium rates along with sufficient cover for major ailments.
Accidental disability cover with Waiver of premium benefit: In this, one can choose to opt for an extra amount paid to you at the time of accidental disability and another additional benefit that waives off all the future due premiums if the unfortunate event were about to happen.
Payout as Regular Income: By opting for a regular income payout option, your family can receive a monthly income even in case of your absence. You also have the option to choose a lump sum payout or a combination of regular and lump sum income.
Term Insurance coverage for self-employed persons can have multiple advantages. It can provide your loved ones’ financial stability and peace of mind to you that your family will be secured against financial difficulties in your absence.
Note: Check out the best term insurance plan in India and choose one that suits your requirements.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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