Life Insurance for Self-Employed & Freelancers If you're self-employed or a freelancer, you already know how important it is to protect yourself and your family. You’ve worked hard to build your business from the ground up, and your income depends entirely on your ability to show up and get the job done. Unlike traditional employees, you don’t have access to employer-provided benefits like life insurance or paid leave. Everything—from generating income to planning for the unexpected—falls squarely on your shoulders. So, what happens if you’re suddenly not around to bring in that income? It’s a sobering thought, but one that freelancers and self-employed folks need to confront head-on. Life insurance isn’t just another financial product—it’s a way to make sure your loved ones are financially protected no matter what happens. Whether it’s covering your mortgage, keeping your kids’ college dreams alive, or making sure your family can maintain their quality of life, life insurance is your way of ensuring they’re taken care of if you’re not there to do it yourself. Let’s dig into why life insurance is non-negotiable for freelancers and what options are out there. For more information on why freelancers need life insurance, check out this article on NerdWallet. You don't have the benefits that traditional employees might get, like employer-sponsored life insurance, so it's on you to make sure you're covered. Let’s dig into why life insurance is non-negotiable for freelancers and what options are out there. For more information on why freelancers need life insurance, check out this article on NerdWallet . 1. Why Life Insurance Is Important for Freelancers When you’re self-employed, your income is unpredictable. One month you’re flush, the next you’re hustling just to cover the bills. Life insurance is what keeps your loved ones afloat if you’re not there to do it. It means they won't be stuck with your debts or left without income. Since you're responsible for everything—from bringing in cash to managing expenses—having a financial safety net is the smart move. If you have dependents, like children or a spouse, life insurance is even more crucial. Without a steady paycheck or group benefits, your family would be left to manage all the bills alone. Life insurance helps cover living expenses, debts, and future costs like your kids’ education. It’s about protecting the people who rely on you. 2. Types of Life Insurance Available There are two main types of life insurance to consider: term life insurance and whole life insurance. Term Life Insurance: This type of insurance covers you for a set period, like 10, 20, or 30 years. It’s straightforward and affordable—if you pass away during the term, your loved ones get a payout. For freelancers, term life is usually a great choice because it gives you coverage without a huge financial commitment. Whole Life Insurance: Whole life insurance covers you for your entire life and includes a savings component that builds cash value over time. For more details on term vs. whole life insurance, see this guide on Investopedia . It’s more expensive, but it could be a good option if you want lifelong coverage and a way to save that you can borrow against. But honestly, if you’re on a tight budget, the high premiums may not make sense. 3. How Much Coverage Do You Need? Figuring out how much coverage you need can be tricky, but here’s a good rule: get enough to replace your income for at least 10 years. Also think about your debts, like a mortgage or student loans, and future expenses, like your kids’ education. The goal is to make sure your family doesn’t face financial hardship if you’re not there to support them. For example, if you earn $50,000 a year, consider getting at least $500,000 in coverage. That way, your loved ones will have enough to cover their expenses and maintain their quality of life while they adjust. 4. Choosing the Right Policy When choosing a life insurance policy, make sure to compare quotes from different providers. There are plenty of online tools that make comparing rates easy. Look for a policy that fits your needs without draining your bank account. If your income isn’t steady, a term policy with a lower premium might be the way to go so you can keep coverage even during lean months. It’s also worth working with an insurance agent or financial advisor who gets the freelance life. They can help you find a policy that makes sense for your situation and answer any questions you have. 5. What About Business Expenses? A common question freelancers ask is whether life insurance premiums can be deducted as a business expense. In most cases, the answer is no. Life insurance premiums are typically considered a personal expense unless the policy is directly related to your business—like key person insurance. So, you’ll need to budget for premiums as part of your personal expenses. Conclusion: Protecting Yourself and Your Family Life insurance is a key part of financial planning for freelancers and self-employed people. It also provides stability and peace of mind for your dependents, ensuring they are financially protected if something happens to you. It ensures your loved ones are protected if something happens to you. Without the safety net of employer-sponsored benefits, it’s on you to find the right coverage. Think about your budget, the type of policy that makes the most sense, and how much coverage will provide real peace of mind for your family. Don’t wait—taking action now can make all the difference later.
Can I Claim Life Insurance as a Business Expense? If you own a business, you're probably always looking for ways to save money on your taxes. One common question is whether you can count life insurance as a business expense. The answer? It depends on several factors. Let’s break it down so you can understand when life insurance might be deductible and when it isn’t. 1. When Life Insurance Can Be Deducted In some cases, you can deduct life insurance as a business expense, but it’s not very common. Usually, the only time you can deduct life insurance premiums is if the policy directly benefits the business, such as protecting the business financially in case of the loss of a key person. For example, if you have a "key person" life insurance policy—one that covers a key employee whose death would hurt the business—the premiums might be deductible. This is because the policy is meant to protect the company, not just the individual. Key person insurance helps your business if someone important, like a founder or top executive, passes away. Since the business is the one receiving the money if the person dies, the premiums might count as a business expense. For more information, check out this article on key person insurance . 2. When Life Insurance Is Not Deductible Most of the time, life insurance policies are not deductible, especially if the person receiving the money is a family member or someone not related to the business. The IRS doesn’t allow a deduction if the policy benefits someone personally rather than the business. Simply put: if the policy benefits an individual and not the business, it can't be deducted. If you own a small business and buy a policy that benefits your spouse or kids, it’s considered a personal expense and cannot be written off. The IRS states that the life insurance must be directly related to the business to be deductible. For more details, this IRS publication on life insurance deductions can help. 3. Group Life Insurance for Employees One exception to the rule is group life insurance for employees. If you offer life insurance as part of an employee benefits package, the premiums you pay could be deductible as a business expense. This is because the policy is provided as a benefit for employees and helps you attract and retain good workers. However, there are limits to how much coverage can be deducted. Policies that offer more than $50,000 in coverage may have some tax implications that you need to consider. 4. Is Deducting Life Insurance Worth It? Even if you qualify to deduct life insurance, you should think about whether it’s the best financial decision. Sometimes, paying the premiums without the deduction might make more sense, especially if your main goal is to take care of your family or protect your business without dealing with complicated tax rules. Always consult with a financial advisor or tax expert to determine what’s best for your situation. Tax laws can be complex, and professional advice can help you avoid costly mistakes. Conclusion: Know the Rules So, can you claim life insurance as a business expense? Sometimes, but only in specific situations. If the policy is related to the business—like key person insurance or group life insurance for employees—you might be able to deduct the premiums. For individual policies that benefit your family, the answer is no. Make sure you understand the purpose of the policy and consult a professional before making any decisions about tax deductions.