Self-employed individuals can opt for tailored term plans that do not require income verification documents such as salary proof or Form 16. These policies now accept alternative income verification methods such as GST filings, credit histories and loan records.
Such flexibility allows self-employed people to buy term insurance without the rigid documentation previously required. Also, simplified underwriting processes and the ability to adjust coverage over time enhance accessibility, ensuring that those with variable incomes can secure adequate protection.
Insurers such as HDFC Life, and Bajaj Allianz and Max Life have customised their term plans to meet the specific needs of self-employed people. Sales of such plans are driven by young entrepreneurs. A study by Policybazaar.com shows that 74% of self-employed term insurance buyers are aged between 27 and 38, reflecting the proactive approach of younger entrepreneurs in securing their financial future.
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Sharad Bajaj, COO, InsuranceDekho, says self-employed individuals face unique challenges when purchasing a term plan, such as inconsistent income and difficulty providing proof of earnings and traditional term plans may not cater to their fluctuating financial situations. “However, tailored plans from certain companies offer flexibility with customisable premiums and coverage amounts, making it easier for self-employed individuals to find suitable options.”
Sum insured
Unlike salaried employees, self-employed individuals do not have a steady paycheck or employer-provided benefits, making life insurance even more essential for providing financial stability. Term insurance provides financial security and ensures their families are safeguarded from financial hardships.
Rakesh Goyal, director, Probus, says it is crucial for self-employed individuals to secure their family’s future in the absence of a steady monthly salary. “The sum insured should ideally be 10-15 times their annual income, factoring in debts, financial goals, and dependents’ needs.” This level of coverage ensures that dependents can maintain their lifestyle and meet financial obligations without the burden of financial strain.
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