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Term Insurance for Self-Employed and Business Owners

Term insurance for self-employed covers the policyholder for a specific period, during which if the life assured suffers an untimely death, the nominee will receive the death benefit. These plans are the most affordable type of life insurance that offers financial security to the family of the self-employed, and thus is considered an essential part of everyone's financial portfolio.

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What is Term Insurance For Self-Employed?

Term Insurance for self-employed is a type of life insurance plan that provides coverage for a specific time or years i.e., a policy term. This type of plan provides a financial benefit to the nominee/beneficiary in case of an unforeseen death of the policyholder during the policy term.

Let’s say a 25-year-old male (healthy and non-smoking) earning 10 lakhs per annum can secure a term cover of 1 crore for his family members for the next 25 years. If he purchases a term policy, he pays around Rs. 1,031/month (excluding all taxes).

Note: Now that you know what Term Insurance for Self-Employed is, you should also know about what is term insurance before buying any term plan for your loved ones.

Term Plans

₹1
Crore

Life Cover

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₹50
LAKH

Life Cover

@ Starting from ₹ 8/day⁺

₹75
LAKH

Life Cover

@ Starting from ₹ 12/day⁺

Term Insurance for Self-Employed and Business Owners Plans

Here is the list of term insurance for self-employed people in India, which is available if your annual income is more than 10 lakhs. These plans do not require income proof and may offer return of premiums or no-cost benefits.

Name of the Insurer	Term Insurance for Self-Employed and Business Owners Plans	Claim Settled Amount (cr)	Entry Age	Maximum Maturity Age
Aditya Birla Sun Life Insurance Company Limited	ABSLI Income Suraksha Plan	458	21-55 years	70 years
Aviva Life Insurance Company India Limited	Aviva Signature 3D Term Plan	98	18-65 years	80 years
Bajaj Allianz Life Insurance Company Limited	Bajaj Allianz eTouch	603	18-55 years	99 years
Bandhan Life Insurance Limited	Bandhan Life iTerm Prime	86	18-65 years	70 years
Bharti Axa Life Insurance Company Limited	Flexi Term Pro	148	18-65 years	99 years
Canara HSBC Life Insurance Company Limited	Canara Young Term Plan	186	18-45 years	99 years
Edelweiss Life Insurance Company Limited	Edelweiss Life Zindagi Plus	59	18-65 years	80 years
Future Generali India Life Insurance Company Limited	Future Generali India Term Insurance Plan	33	18-60 years	65 years
HDFC Life Insurance Company Limited	HDFC Click 2 Protect Super	1,389	18-65 years	85 years
ICICI Prudential Life Insurance Company Limited	ICICI iProtect Smart	1,950	18-65 years	99 years
IndiaFirst Life Insurance Company Limited	IndiaFirst Life Elite Term Plan	160	18-60 years	99 years
Kotak Mahindra Life Insurance Company Limited	Kotak e Term	321	18-65 years	85 years
Life Insurance Corporation of India	LIC New Tech Term Plan	18,398	18-65 years	80 years
Axis Max Life Insurance Company Limited	Max Life Smart Total Elite Protection	1,242	18-65 years	85 years
PNB MetLife India Insurance Company Limited	PNB MetLife Mera Term Plan Plus	407	18-50 years	80 years
Pramerica Life Insurance Company Limited	Pramerica Life Rock Solid Plan	30	18-65 years	85 years
SBI Life Insurance Company Limited	SBI eShield Next Plan	1,676	18-65 years	100 years
Shriram Life Insurance Company Limited	Shriram Life Smart Protection Plan	109	18-65 years	75 years
Star Union DAI-ICHI Life Insurance Company Limited	SUD Life Protect Shield Plus	113	18-60 years	80 years
Tata AIA Life Insurance Company Limited	Tata AIA Sampoorna Raksha Promise	776	18-65 years	100 years

*Disclaimer: The list of insurers mentioned are arranged according to the alphabetical order of the name of insurance company respectively. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. The list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website www.irdai.gov.in

* You can use the term insurance calculator online to get an estimate of the premiums you would need to pay for the desired life cover.

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Why Term Insurance for Self-Employed/Business Owners is Important?

Here are some of the reasons to buy term insurance for self-employed individuals:

Option to pay premium in a single go: When you are self-employed or a business owner, you may not have a steady income flow, thus paying regular premiums may become a difficult task. However, you can choose to opt for a single premium term insurance where you can enjoy the benefits of paying premium single time at the time of buying plan. This will help you receive benefits and maximum coverage till the end of policy term. This simply means your loved ones are financially secure from uncertain conditions of the market irrespective of how your business is performing. Thus, term insurance for self-employed individuals and business owners is very beneficial.
Business liabilities: In addition to the typical bills and expenses a salaried person deals with, self-employed individuals also have to manage business-related debts and obligations. If your business is in its starting phase and you are facing liabilities with respect to long term loans for enlarging your business or for capital financing like securing raw materials, it’s important to have a term plan to make sure your loved ones are not burdened with such huge loans in case any unfortunate event happens.
Experiences financial hardships in the informal sector: Self-employment is hard in today’s times. The informal sector is more vulnerable to variations in the market and the economy. COVID has proved how self-employed individuals have struggled to keep their earnings consistent during lockdowns. The majority of them have turned to avail loans. In case of your unfortunate death, the responsibility of settling your loan amount/debt can come to your dependents. The sum assured amount received from a term insurance for business owners can offer your dear ones the means to repay your amounts.
May not have employer-sponsored plan: People working in the formal sector receive various benefits such as employer-provided insurance plans or employer-sponsored pension plans, health and life insurance covers. Whereas in the case of self-employment, the whole responsibility of protecting the future of your dear ones is on you. Being an employer yourself, you need to invest some amount on a regular basis towards your retirement and other financial objectives, including marriage and children’s higher education. Term insurance for business owners can ensure that you generate a corpus for your dependents/family members for a time when you may not be with them. This helps them cover their expenses in the absence of any earnings.
Financial assistance in case of critical illnesses or disabilities: Term insurance for self-employed individuals comes with benefits such as opting for additional coverage for critical illness and disability at a nominal extra premium while buying the policy. For example, the policyholder will get a sum assured on the 1st diagnosis of a specified critical illness under the plan, however, if the policyholder dies after getting the medical treatment, the death benefit is then paid to the nominee of the policyholder. Both these cases can financially disturb your family if you are self-employed, so it’s smart to buy a term plan that provides coverage against critical illnesses.

Essential Term Coverage for Business Stability

For self-employed individuals and business owners, a critical type of term insurance to consider is Keyman Insurance. Keyman Insurance is a specialized term policy that provides coverage to protect a business from financial loss in the event of the unexpected death or disability of a key person—typically a founder, partner, or someone instrumental to the company’s success. When a key individual whose skills, knowledge, or business contacts are essential is covered by Keyman Insurance, the policy’s benefits go directly to the business, helping it manage losses, ensure operational continuity, and retain customer and investor confidence. Keyman Insurance can be a smart financial safeguard, providing the business with the necessary funds to cover expenses, recruit replacements, or manage any disruption to business activities. This insurance can form a vital part of a well-rounded risk management strategy for self-employed individuals or business owners.

How to Select the Right Term Insurance for Self-Employed Individuals?

With the availability of a number of plans in the market, it is very difficult to choose the right one. Let us discuss a few points that one should keep in mind while selecting and purchasing term insurance for self-employed persons:

Adequate Sum Assured: It is important to ensure that you decide upon an adequate sum assured amount before buying a term insurance plan. The sum assured should always be equal to your unsettled liabilities, loans, and expenses needed to maintain the existing lifestyle and achieve life objectives such as marriage, children’s higher education, and retirement.
Policy Term: If you are a self-employed individual, then your working hours are definitely more than a salaried individual. A salaried person can work till 60 years of age whereas a self-employed person would work for another ten years. Always choose a plan that covers you till 80 or 85 years of age.
Premium Payment Term: The option of regular payment of premium is right for the salaried section persons as they have a consistent and regular income source. On the other hand, for self-employed persons, it is important to first pay off all the premium amounts as soon as possible, i.e., by using a limited premium payment term. Using this option, one can pay for the complete policy term within a few years.
Medical Examination: Make sure to completely fill out the proposal form with the correct details at the time of purchasing a term insurance plan. You are required to undergo the medical tests as requested by the company. This means that the company is completely aware of your health condition, and you have suppressed no facts about your pre-existing ailments or health.
Read Policy Documents: Carefully read the policy documents to ensure that you understand each and every aspect of the policy to avoid future confusion. You can also consult your financial advisor to understand the policy details better.
Add Required Riders: You should look at the riders available under the term insurance for self-employed and add the relevant riders to enhance the coverage of your base plan at nominal premiums.

Why Should You Buy Term Insurance for Business Owners?

Term insurance for self-employed individuals in India offers the following key features:

Death Benefits: These term plans offer death benefits on the policyholder's death that can help their family members care for their financial needs.
Customisable: Term insurance for self-employed is customisable, and thus, you can change the sum assured, policy term, and other factors to fit your needs.
Terminal Illness: With these plans, you can get terminal illness coverage, under which if you are diagnosed with a terminal illness, the sum assured will be paid out in advance.
Accidental Death Benefits: In case of an accidental death of the policyholder, an additional amount will be paid to the nominee to help take care of their financial needs.
Waiver of Premiums: Under a waiver of premium rider, if the policyholder loses his/her job due to a critical illness or disability, the remaining premiums will be waived off.

How to Buy Term Insurance for Self-employed from Policybazaar?

Following is a step-to-step guide to buy term plan for self-employed from Policybazaar:

Step 1: Visit the Term Insurance form

Step 2: Fill in all the required details like name, contact details, gender, and date of birth. Then, click on ‘Check Your Premium Now’

Step 3: Answer the basic questions about the type of occupation, annual income, educational qualification, and smoking habits.

Step 4: After submitting all the information, a list of all available term insurance plans will be displayed

Step 5: Choose the term insurance for business owners and proceed to pay

Documents Required to Buy Term Insurance for Self-employed/Business Owner

Insurance companies have understood the limitation around the non-availability of high insurance coverage, and recently started providing covers on documents other than ITR to self-employed individuals to increase their cover.

Following is a list of important documents required to buy term insurance for business owners form the top insurance companies:

Type of Documents	Required Proofs
PAN Card/Form 60	Officially Valid Document
ID and Address Proof	Passport Driving License (DL) Aadhar card ITR Form 16 Job card issued by National Rural Employment Guarantee Act 2005 (NREGA).
Medical Reports	Documents about your health conditions and pre-existing illnesses
Income Proof	For Self Employed Last 2 years Income tax returns which are not filed in the same year along with income computation If income calculation is not available, submit last 3 years income tax returns (not filed in same year) Form 26 AS Audited balance sheet and profit loss document certified by CA for last 2 years
Photographs	Passport sized

Alternate Documents that can be used to buy term insurance for self-employed and business owner individuals are as follows:

Car RC
Mutual funds SIP
Credit card limit
Credit score/rating by credit bureaus
As a multiple of the limit of your credit card
As a multiple of the monthly EMI on your home loan
As a multiple of monthly SIP in mutual funds

Asset owned calculations

Eligibility of sum assured amounting to 50% of the shop/house owned by you with a value of up to a maximum of Rs 2 Crore
Sum assured amounting to 1.5X the fixed deposit/portfolio statements/mutual fund statements

In fact, Policybazaar has special plans for self-employed/ business owners which give financial waivers without you having to submit any income proof.

Note: Check out the term insurance plan in India and choose one that suits your requirements.

FAQs

Q: Can Business Owners and Self-Employed Individuals Take Term Insurance?

Ans: Yes, business owners and self-employed individuals can take term insurance. Term life insurance provides a death benefit to the designated beneficiary if the policyholder passes away during the policy term. This policy is an important financial planning tool for self-employed individuals, offering essential protection for loved ones and ensuring financial security in the event of unforeseen circumstances. Term insurance can play a key role in covering debts, supporting dependents, or even sustaining business continuity.
Q: Can Term Insurance Premiums Be Claimed in ITR?

Ans: Yes, you can claim deductions for premiums paid toward term insurance under Section 80C of the Income Tax Act, 1961. This deduction is available up to a maximum limit of ₹1.5 lakh per year, providing valuable tax savings while securing financial protection for your loved ones.
Q: What is the Minimum Income Required for a Business Owner to Qualify for a Term Plan?

Ans: The minimum income required for a business owner to qualify for a term insurance plan varies by insurer, but proof of steady income is generally needed. Most insurers require an annual income of at least ₹2-3 lakh or higher to determine eligibility.
Q: Is 2 crore term insurance enough for NRIs?

Ans: Depending on their financial goals, family needs, and liabilities, a ₹2 crore term insurance plan may be sufficient for NRIs. However, assessing personal factors like income, lifestyle, dependents, and outstanding debts is best to ensure adequate coverage. Consulting a financial advisor can help determine if this amount aligns with your long-term protection needs.