- How Does It Work?
- Benefits Offered
- How to Choose?
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Himanshu is a content marketer with 2 years of experience in the life insurance sector. His motto is to make life insurance topics simple and easy to understand yet one level deeper for our readers.
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Updated on Mar 11, 2025 8 min read
What is the Term Insurance for Self-employed?
Self-employed term insurance is a type of life insurance policy that offers financial protection to your loved ones in case of your unfortunate death during the policy tenure. Buying a term insurance plan for self-employed individuals ensures that their family is financially stable in case of their unexpected death during the policy tenure. They can use the death benefits received to meet their financial responsibilities including lifestyle expenses, any outstanding loans, or emergencies.
There are different term plans available in the market. However, choosing the right term insurance policy for self-employed ensures that their family can live a hassle-free life even in their absence. While choosing a term plan you should consider various factors including the claim settlement ratio of the insurer, customer reviews of the plan, premium amount, policy exclusions, etc.
How Does Self-employed Term Insurance Work?
A term insurance plan for self-employed individuals works the same as a term insurance policy for salaried people. You have to pay premiums for the chosen policy tenure and in exchange the insurer provides coverage to secure your family’s financial future. In the case of the policyholder’s unfortunate demise during the policy tenure, death benefits are paid to their nominee. Buying a term insurance plan early offers the benefits of lower premiums.
Let’s understand how term insurance for self-employed individuals works with a simple premium illustration.
Mr Sameer is a 30-year-old self-employed who earns Rs 7 lakhs annually. He was looking for a term life insurance plan to safeguard his family’s financial future in case anything uncertain happened to him. So he uses the PolicyX Term Insurance Premium Calculator to find the best term plan and calculate its premiums. He chooses the Axis Max Smart Term Plan Plus with a sum assured of Rs 1 crore and a policy tenure of 30 years.
| Policyholder’s Age | Plan Name | Sum Assured | Policy Tenure | Annual Premiums | Total Premiums |
| 30 years | Axis Max Smart Term Plan Plus | Rs 1 crore | 30 years | Rs 12,270 | Rs 3,68,100 |
Key Takeaways:
(i) In case of Mr Sameer’s uncertain death during the policy tenure, a sum assured of Rs 1 crore would be paid to his nominee.
(ii) If Mr Sameer survives the policy tenure, the policy will lapse and no benefits will be paid.
pert Insights
According to a report, the purchase of term insurance plans among self-employed individuals has increased by 50%. As the number of entrepreneurs is increasing, so is the demand for customized insurance plans to cater to their unique needs. Moreover, 74% of the self-employed term insurance buyers are aged between 27 and 38 years.
Best Term Insurance Plans for Self-employed
Finding the right term insurance plan involves a lot of research as there are several term plans available in the market. We have provided a list of the best term insurance for self-employed individuals that you can consider buying.
| Plan Name | Unique Features | CSR (2023-24) | Sum Assured | Entry Age | Minimum Annual Premiums |
| Axis Max Life Smart Term Plan Plus |
| 99.65% | Rs 25 lakhs to No limit | 18 to 65 years | Based on the minimum sum assured |
| Tata AIA Sampoorna Raksha Promise |
| 99.13% | Rs 25 lakhs to No limit | 18 to 65 years | Rs 502-/ per month |
| Bajaj Allianz e Touch II |
| 99.23% | Rs 50 lakhs to No limit | 18 to 65 years | Rs 873-/ per month |
| HDFC Life Click 2 Protect Super |
| 99.5% | Rs 10,000 to No limit | 18 to 84 years | Rs 1181-/ per month |
| ICICI Prudential iProtect Super Term Plan |
| 99.17% | Rs 50 lakhs to 1 crore | 18 to 55 years | Based on the minimum sum assured |
| Kotak E-term Plan |
| 98.29% | Rs 51 lakhs to No limit | 18 to 65 years | Based on the minimum sum assured |
| PNB MetLife Mera Term Plan Plus |
| 99.2% | Rs 25 lakhs to No limit | 18 to 60 years | Rs 600-/ per month |
Benefits of Term Insurance Plan for Self-employed
Buying a term life insurance plan offers various benefits to self-employed individuals:
Financial Security
Term insurance is the most affordable form of life insurance that offers financial security to your loved ones in case of an uncertain death. A term plan ensures that your family is taken care of even in your absence.Tax Benefits
You can avail of tax exemptions up to Rs 1.5 lakhs on the premiums paid for your term insurance policy under Section 80 (C). Moreover, the death benefits paid are also tax-free under Section 10 (10D) of the Income Tax Act, of 1961.Flexible Premium Payment Options
Term insurance for self-employed offers flexible premium payment options including single pay and limited pay. A single premium option is best for individuals who currently have money and whose income is inconsistent.Debt Coverage
A self-employed individual may take on debts to meet business and personal expenses. Term insurance ensures that your loan EMIs do not fall on your loved ones and they can live a hassle-fre life.Income Benefits
Self-employed term insurance offers income benefits to your loved ones in case of your uncertain death during the policy tenure. A regular income allows your loved ones to live a comfortable life.Additional Coverage
Term insurance for self-employed allows you to enhance the plan coverage by choosing additional rider benefits. There are various riders available with term plans including accidental death benefit rider, waiver of premium rider, critical illness rider, etc.Premium Break Option
Various term insurance plans for self-employed individuals provide an option to delay the premium payment for up to 12 months. This option is beneficial in case the policyholder faces any financial issues or unforeseen circumstances.
Types of Term Insurance Plans for Self-employed
There are different types of term insurance plans for self-employed individuals. You can choose the one that best suits your needs.
Level Term Insurance
A level term insurance or a pure protection plan offers chosen death benefits in case of the policyholder’s uncertain death. The premium amount and the life cover remain fixed throughout the policy tenure. The earlier you buy a level term insurance, the lower your premiums will be.Term Insurance with Return of Premium (TROPs)
A TROP plan returns all the premiums paid in case the policyholder survives the policy tenure. This is an ideal option for self-employed individuals who want to buy a term plan with a guaranteed return of money. The premiums for TROP plans are higher than pure protection plans.Increasing Term Insurance
An increasing term insurance allows self-employed individuals to increase their plan coverage with an increase in their responsibilities. You can increase your sum assured at various important stages of life such as marriage, childbirth, education, etc.Decreasing Term Insurance
Decreasing term insurance plans allows policyholders to decrease their sum assured on completion of certain financial goals such as debt payoff, achieving certain goals, etc.Convertible Term Insurance
A self-employed person can opt for a convertible term plan that allows them to convert their regular term plan into a whole life insurance policy. The premiums for convertible term plans are lower than whole life insurance plans.Group Term Insurance
If you are a self-employed individual running an organization, you can purchase group term insurance. It provides coverage to you as well as individuals who are part of your organization. The cost of a group term life insurance is lower than individual term plans.
We have defined various types of term insurance plans available for a self-employed individual. However, you must buy a term insurance plan that aligns with your financial goals.
How to Choose the Best Term Insurance Plan for Self-employed Individuals?
There are certain things that you must consider when choosing the best term so that you can make the right decision.
Compare Various Plans
There are several term insurance plans available for self-employed individuals. You must compare various plans based on the premium amount, riders available, benefits offered, etc, and choose the one that best aligns with your goals.Read the Plan Documents Carefully
You must read and understand your plan documents carefully. Understand what is covered, what is not covered, and if there are any special exclusions.Read Customer Reviews and Testimonials
Before choosing the self-employed term insurance plan you must read the testimonials and reviews provided by the existing customers of that plan so that you can make the right choice.Choose Appropriate Sum Assured
Ideally, the sum assured you choose should be 10 to 15 times your annual income. Choose a sum assured keeping various things in mind including several dependents, financial responsibilities, business needs, etc. The chosen sum assured must be enough to allow your loved ones to lead a hassle-free life.Add Only Necessary Riders
Every additional rider you choose with a self-employed term insurance plan adds to your premium cost. You must choose the riders that align with your needs the best.Choose the Right Policy Tenure
The policy tenure you choose must match your financial responsibilities. If you have any outstanding loans, you must choose the policy tenure equal to loan tenure.
Conclusion
A self-employed individual must buy term life insurance to make sure that their loved ones are financially covered even if something unfortunate happens to them. Self-employed term insurance offers a range of benefits including low-cost premiums, flexible policy tenure, choice of sum assured, premium breaks, and much more.
Choosing the right term insurance plan for self-employed can be a hectic task. If you are confused about which term insurance plan is right, you can contact us at PolicyX.com.
We offer No Spam, No Gimmicks, and Only Expert Insurance Advice.
FAQs: Term Insurance for Self Employed
1. Can self-employed get term insurance?
Yes, self-employed individuals can buy a term insurance plan either from PolicyX.com or the insurer’s official website.
2. Does term insurance cover your debts?
Yes, a term insurance plan ensures that your debts do not create a burden for your loved ones.
3. Can self-employed individuals avail of tax benefits on premiums paid for term insurance?
Yes, self-employed individuals can avail of tax benefits up to Rs 1.5 lakh under Sectio 80 (C) of the Income Tax Act, 1961.
4. Can I avail of additional riders with self-employed term insurance?
Yes, you can avail of additional riders with your term insurance policy.
5. Which term insurance plan is specifically designed for self-employed individuals?
ICICI Prudential iProtect Super Term Plan is specifically designed for self-employed individuals.
Other Term Insurance Companies
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Written By: Himanshu Kumar
Himanshu is a seasoned content writer specializing in keeping readers engaged with the insurance industry, term and life insurance developments, etc. With an experience of 2 years in insurance and HR tech, Himanshu simplifies the insurance information and it is completely visible in his content pieces. He believes in making the content understandable to any common man.
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