What type of life insurance should freelancers choose?
The freelance lifestyle comes with a lot of independence. Creating a schedule that works for you is just the half of it.
It is this autonomy that makes freelancing very attractive to many people. You not only have the freedom to make crucial decisions, but you can also pick the clients you want to work with and your dress code (hello pyjamas).
However, like anything else, freelancing life comes with several drawbacks. For starters, you have to keep track of your money and bills and ensure your taxes and mortgages are paid on time. The most significant of these downsides though is that freelancing doesn’t come with financial protection that some salaried occupations may provide, for example death in service benefits or sick pay.
This is why every freelancer should consider taking out financial insurance that offers protection against being unable to work due to accident, sickness or passing away. Caspian Insurance has an excellent cover for freelancers, you might want to check it out!
Why is life insurance for freelancers important?
If you’re like most freelancers, you probably work for yourself, aka manage all facets of your life including work and finances. Having a life insurance policy will help to protect the financial future of your loved ones.
Salaried employees may enjoy multiple benefits that are not readily available to freelancers. One of them is death in service benefits where your dependents generally receive a multiple of your income should you die while employed. Others may include sick leave and health insurance.
As a freelancer, it is your responsibility to consider such options in order to provide financial support to your family.
The following are three reasons you should consider Life Insurance today:
- Life Insurance policies can help you pay or contribute to funeral costs.
- Pay off an outstanding mortgage or debts.
- Provide a source of income to financially support your family or loved ones.
Three types of protection available for freelancers
Freelancing is an exciting career path that offers diverse opportunities. Even then, it’s important to protect yourself and your dependents from the uncertainties that come with this lifestyle.
When considering life insurance options for freelancers, it's important to explore a variety of insurance products to make an informed decision about what suits your individual needs best. Click here to find more information on Insurance products.
The following are three types of protection policies you might want to consider taking out as a freelancer:
Critical illness benefit
Critical Illness benefit provides a lump-sum payout in the event of being diagnosed with a defined Critical Illness. For example, heart attacks, cancer and strokes providing they meet your chosen insurer’s definition. Once a full pay-out has been made the policy will usually stop.
Income Protection insurance
As a freelancer, your health is your wealth. Unlike some salaried employees, you may not have the luxury of paid sick leave. So, what happens if you get a long term illness that prevents you from working for a considerable amount of time?
This is where Income Protection comes in to help replace your lost earnings. Income protection benefit provides you with a regular monthly income. Usually, this will be a percentage of your income until you regain your health, resume work or until your policy ends.
Term insurance
A term policy will pay-out a predetermined lump sum usually in the event of death within the policy term (subject to terms and conditions). Once a successful claim has been made, the policy will pay out and the cover will stop.
Choosing a suitable life insurance policy
Are you finding it difficult to choose the right cover for your unique needs as a freelancer? The following three factors should help you make a more informed decision:
Policy benefit
Before anything else, you should decide on how much cover you would like. Do you have a young family and want them to have a financial cushion in the event of your passing? Or would you like your cover to help pay off your mortgage? Knowing what you want is key in determining how much to pay.
Claims statistics
An excellent way to gauge the reliability of a life insurer is to look at its claims settlement ratio. Put simply, this is the total number of claims the company has settled in a year against the number of claims raised within that period. The higher the ratio, the higher the likelihood that you too will be compensated.
Insurer rates
Like in any other industry, insurance rates vary from one provider to the other. As such, you might want to conduct market research to compare various life insurers against the covers and benefits that they offer. While you are at it, understand that quotes also vary depending on the type of life insurance policy you wish to buy. A Whole of Life policy of £25,000 won’t be the same as a term cover of the same amount.
