When you begin a traditional job, there is often a scheduled meeting with human resources where you go over the health insurance plan, the pension plan and the group life insurance. However, freelancers must act as their own staff department and figure out how to set up their health insurance and pension plans on their own – and yes, their life insurance policy as well.
Many freelancers do not consider taking out a life insurance, either because they are not aware that it is an alternative or because their partner has life insurance through a traditional employer. This can have serious financial consequences, especially for freelancers with debt (including corporate debt) or relatives.
If you are a freelancer whose spouse has life insurance, there are many good reasons to take out a life insurance policy of your own. If you are a freelancer with children or aging parents, life insurance is essentially essential. Even if you are a freelancer without any children, you can take out life insurance so that no one gets stuck paying your student loans after you have died.
So set up a meeting with your personnel department ̵
Can Freelancers Get Life Insurance?
Freelancers often assume that some types of insurance are not only available to them. After all, there was a limited number of ways to gain access to health insurance but a traditional employer before the price agreement. Even with ACA in place, freelancers have fewer opportunities to access additional types of insurance, such as short-term insurance, than those who are traditionally employed.
However, it is very easy for a freelancer to sign up for a life insurance policy. Despite the fact that employers often offer life insurance as an employment benefit, life insurance is not linked to traditional employment in the same way as health insurance before ACA. Self-employed people have as much access to life insurance as anyone else, and you can take out a life insurance policy if your taxable income is reported on W-2 or 1099.
What types of life insurance are available?  Here are two popular types of life insurance: Term life insurance and life insurance, a form of permanent life insurance. We have a complete overview of the term vs. whole life insurance, but here is tl; dr: term life insurance covers the period when the policy is active and whole life insurance covers you throughout your life.
In other words, you can charge a term life policy that covers a certain time – 10 years, 20 years, 30 years, etc. – and when the term is complete you choose not to continue your policy. (Of course, if you do not take on a new term's life policy after your first term expires, your recipients will no longer receive any benefit after your death.)
People often take lifelong policies to cover a certain length of time during which their death can cause exceptional financial damage to their families. For example, parents can take out life insurance to cover their children's dependencies.
By contrast, the entire life policy covers you all your life. These policies are usually more expensive than maturity policies, but they include a cash accumulation component called the policy cash value that can grow over time.
What kind of life insurance you choose is the ultimate goal: Protect those you love in a way that makes sense to you.
How much life insurance does freelancers need?
Freelancers, like everyone else, need different amounts of life insurance depending on their financial situation and their beneficiaries. A single person who does not have children, for example, may not need life insurance – unless they fall into one of these seven categories. (Do you have student loan debt or mortgage loan? Do you support aging parents? Click this link.)
Usually, professionals recommend taking out a life insurance policy of 5-10 times your annual income. As freelancers often have annual earnings that vary from year to year, you can crawl your previous annual income, choose your highest income year, or simply use last year's income as a reference.
But "five to ten times your annual income" recommendation is just a starting point. You will also consider additional factors such as your debts, care and healthcare costs (for your surviving spouse and / or child) and even funeral expenses. Haven Life has an online life insurance calculator that can help you decide how much life insurance is best for you and your family.
How can freelancers with variable income budgets for life insurance?
If you are a type of freelancer who can earn $ 5,000 a month and $ 500 the next, you know how difficult it can be to manage your cash flow and budget for upcoming costs. When setting up a term life insurance through Haven Life, you pay a monthly premium, just as you pay for health insurance. Here are some ways you can make sure that there is enough money in the bank to pay that premium every month, even with variable income:
Keep your life insurance affordable
We have a few tips and tricks to get it premiums down, for example, buy life insurance when you are young and healthy (you will keep the same premium throughout the term, even when you are … less young).
During the flush pages, set aside money for the lean times
We know it's tempting to spend every dollar you earn during one of the big paycheck months, but it must be a payday month sometime in the future – so save it!
Use a budgeting app to manage your current and future expenses
Because you have variable income, you want a budgeting app that allows you to plan for both common costs (such as your monthly bills) and irregular expenses (such as a new laptop) and budget these costs when you earn income.
Don't think about life insurance as something you should take care of later, when you can afford it. Freelancers need life insurance as much as anyone else, so ask yourself if it's time to take out a life insurance and make sure your loved ones can benefit from the work you put into your freelance career even after you are gone. 19659002] Nicole Dieker is a full-time freelance writer. Her work is regularly shown on Bankrate, Lifehacker, The Write Life, and many other sites. She is the author of Frugal and The Beast: And Other Financial Fairies. This article is sponsored by the Haven Life Insurance Agency. The opinions are her own.
The Port Life Insurance Agency offers this only as pedagogical and the information provided is not written or intended as special legal advice. Haven Life Insurance Agency does not provide legal advice. People are encouraged to seek advice from their own legal adviser.
Haven Term is a Term Life Insurance Policy (ICC17DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through the Haven Life Insurance Agency, LLC. The number and features of policies and riders may vary by state and may not be available in all states. In New York, Haven Term DTC-NY is 1017. Our license number in California is OK71922 and in Arkansas, 100139527.