While freelancing offers a great deal of freedom, it also comes with responsibility for all benefits. Freelancers may be tempted to skip the expense of life insurance. However, there are several things to consider before passing it up.
Life Insurance Provides SecurityMany freelancers have income that fluctuates from month to month, which can lead to the temptation to cut costs wherever possible. However, life insurance should be a priority. A policy with adequate coverage doesn't just cover personal expenses; it can also protect sole proprietors' heirs from business-related debts that could otherwise affect an estate.
There Are Many Ways to Choose Coverage LevelsSome people base their coverage amounts on how much family income they'd need to replace over a specific span of years. For instance, a freelancer who has children who are 10 and 12 years old may wish to buy a policy equal to 8 years of income to get the kids to adulthood. Other people estimate how much coverage they need based on expenses over a specific span of time. Since freelancer incomes can vary, it's important to think in terms of annual averages. This can help you ensure that you purchase enough coverage to keep your family safe.
Term Insurance Is Probably Your Best BetLife insurance is broken down into two basic types. The first is term insurance, which involves contracts for a set number of years at a specific price. The second is whole life, or permanent insurance, which allows you to lock in a set price permanently. The latter also functions as an interest-based savings account where you can borrow against the policy's value. In nearly all cases, whole life insurance will be drastically more expensive than an equal amount of term insurance. Purchasing term life insurance means purchasing a product that offers a specific benefit: funds to cover your family in the case of your death or permanent disability. By focusing on this, you can get the best product for your money and your family.
Freelancing is a lifestyle that comes with enough uncertainty as is, and, thinking about the implications of life insurance can be an added difficulty. However, by facing uncertainty and potential problems head-on, you can reduce the impact of untoward events. Buying enough life insurance coverage helps you ameliorate some of the most dramatic events in your life.
When considering life insurance policies, find a professional you trust who can carefully explain each of the options to you in detail. Sproutt's insurance advisors provide unbiased advice, since we're not affiliated with any insurance carrier. Gathering information, considering your goals for such policies, and then creating a plan that meets your needs, is always the right route to take.