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ActiveQuote Global Reach, Dunleavey Drive Cardiff South Wales CF11 0SN 0800 862 0373


Life insurance for self-employed

Compare life insurance for self-employed

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Life insurance for the self-employed

There are many advantages to being self-employed, such as being your own boss, having a better work-life balance and, if you’re home-based, avoiding the daily commute.

However, without some of the financial benefits often provided by employers, such as death in service benefit, it’s wise to look into what cover would help if things don’t go to plan. Life insurance - which is also known as life cover - is designed to protect your family and other people who depend on you financially, in the event of your death.

Do I need life insurance as a self-employed person?

When you’re self-employed, sometimes there’s no financial back-up; all the responsibility lies with you. So it’s important to think about what would happen if you became unable to work due to illness (in which case you might need income protection) or should you unexpectedly pass away. 

Whatever the size of your business, you should consider how expenses, loans and outstanding invoices would be managed if you were no longer there. Life cover pays out a tax-free lump sum on the death of the policyholder. If you were to pass away, this payment could enable your family to stay in the home, cover monthly living costs and keep your business running, should they wish to.

Save money on your life insurance for self-employed

At what age should I buy life insurance?

Life events such as getting married, buying a house, starting a family or owning a business are important factors in determining when you need life cover. 

Life insurance is one of the most affordable ways to protect your family’s finances in the event of your death and, if you want to keep your premiums low, the ideal time to purchase life cover is in your mid 20s. Our guide to why you need life insurance if you’re under 30 explains the advantages of taking out life cover early on.

As you reach your 30s and 40s and begin the next stage of your life, you’re more likely to have children, a mortgage and other financial commitments. You might have also recently become self-employed after building up experience in-house.

If you’re starting to think about retirement, specialist plans are available. Over-50s life insurance is designed for people aged between 50 and 80 and can provide a valuable financial safety net, giving you peace of mind.

What are the self-employed life insurance options?

Whether you are employed or self-employed, life insurance works in the same way. The main types of cover are ‘fixed’ or ‘term’ life insurance, decreasing life cover, increasing life cover and whole of life insurance

Term life insurance: This runs for a set number of years and provides a payout if you die within the ‘term’ of your policy.

Whole of life cover: This runs until you pass away and is therefore guaranteed to pay out. It is also often known as ‘life assurance’, as the payout is assured. Due to its nature, premiums can be more expensive, so it’s wise to compare life insurance to find the right policy for your needs.

Decreasing life cover: This is designed to provide a payout that decreases in value with each year of the policy. With this type of cover, you set the amount and the length of the term. These policies can be used to help with a number of things such as repayment mortgages, decreasing in line with the outstanding amount left to pay.

Increasing life cover: This increases the death benefit each year of the term to protect against things like inflation and potential increased family financial needs, such as university fees. 

With several different types of life cover available, it’s wise to compare products and quotes. ActiveQuote’s impartial experts are on hand to provide you with advice and support and help you to compare life insurance policies to find the best policy for your situation.

Additional insurance products for the self-employed

Being self-employed allows you to work in a job you’re passionate about, but it can come with a certain level of unpredictability. As well as life insurance, you should also think about other types of protection, which could cover you if you become unable to work due to sickness or injury. 

Products such as critical illness cover and accident and sickness insurance can help to bring stability, peace of mind and essential financial security when your loved ones need it most - yet eight out of 10 freelancers have no protection in place. Read our article on how to look after your business and take care of yourself to find out more!