Financial Security For Self Employed Without Corporate Benefits

2025-06-25

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Being self-employed is empowering. You set your own hours, choose your clients, and control your earnings. More importantly, you set an example for many aspiring entrepreneurs who want to prove themselves. It is believed that by 2030, we will see over 22K+ startups in India, which is an impressively encouraging number.

Nevertheless, having a financial cushion is important too. Unlike salaried employees, there are no benefits like employer-sponsored health coverage, retirement benefits, or life insurance. So, as a self-employed person, you can opt for smart investments like term life insurance plans. These plans can offer a multitude of benefits when invested in strategically.

Let's explore how term insurance can help you safeguard your financial future.

Key Takeaways

An emergency fund covering 6-12 months of expenses is crucial for self-employed stability.

A term life policy ensures financial protection for dependents in case of unforeseen events.

Multiple income sources using tax-saving components of term plans offer long-term financial stability.

A critical illness rider with a term plan can provide extra coverage without needing separate health insurance.

Why is Financial Security Crucial for the Self-employed?

Unlike salaried professionals, freelancers, entrepreneurs, and business owners face income fluctuations. A slow business month, medical emergency, or unexpected expense can disrupt financial stability. Without corporate benefits, securing your own safety net becomes imperative. Here’s how:

Income Protection: Ensuring financial stability during lean periods.
Retirement Planning: Building a secure future without an employer-sponsored pension.
Medical Security: Managing healthcare expenses independently.
Family Protection: Ensuring your dependents are financially secure if anything happens to you

Begin securing your future

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How Does Term Insurance Offer Financial Security for Self-employed?

Term life insurance is not just a regular coverage investment as it is perceived by many. A strategic investment is always more fruitful. Here’s an overview of how term life insurance offers you financial security:

Build an Emergency Fund: Financial stability starts with an emergency fund. Experts recommend setting aside at least 6-12 months’ worth of expenses to cover unforeseen circumstances like medical emergencies or loss of business.

Invest in a Term Life Insurance Plan: A term policy ensures that your loved ones remain financially secure after you. Since self-employed individuals don’t have employer-backed insurance, having a term plan provides peace of mind. The benefits of a term plan for self-employed individuals are as follows:

Features	Benefit
Affordable Premiums	Higher coverage at lower costs
Financial Safety	Protects family in case of untimely death
Customisable Coverage	Choose add-ons like disability or critical illness cover
Tax Benefits	Eligible for tax deductions under Section 80C

Did You Know?

Government programmes like Mudra Yojana, Skill India, Start-Up India, and Stand-Up India have encouraged self-employment.

Source: Economic Times

Diversify Income Streams with Tax Benefits: Relying on just one income source can put you in a financial constraint during emergencies. When you strategically invest in a term plan, you can use the annual tax exemption benefits received under Section 80C. The annual relief of ₹1.5 lakhs can offer you passive income that you may further use to diversify your income streams.
Create a Retirement Strategy: Without employer-sponsored pension plans, self-employed individuals must take retirement planning into their own hands. Following are a few options available:
1. Public Provident Fund (PPF): A safe, tax-saving investment.
2. National Pension System (NPS): Provides market-linked returns and tax benefits.
3. Mutual Funds and SIPs: For long-term wealth creation.

Apart from these, you can also consider term insurance because of its three-fold benefits. When you opt for term insurance with a return on premium feature, it builds a corpus for the future, saves on taxes annually, and provides a guaranteed benefit on successful policy completion.

Secure Your Health with Medical Insurance: A sudden illness or accident will always be unexpected, and it can drain savings. Now, in such cases, a comprehensive health plan would be suitable, but it won’t have any other benefits like a term plan. However, with term plans, you can always opt for a critical illness rider benefit that would not require a separate investment and still offer similar benefits.

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Conclusion

Being self-employed comes with immense freedom, but it also requires disciplined financial planning. By building an emergency fund, securing a term insurance plan, investing wisely, and planning for retirement, you can achieve financial security.

At Canara HSBC Life Insurance, we understand the unique financial needs of self-employed individuals. Our comprehensive term plan, like the iSelect Smart360 Term Plan, is one of the most popular ones. It is basically an all-in-one plan that has every rider benefit you'd require to have peace of mind for yourself and your loved ones.

Securing your financial future as a self-employed professional is a necessity. Take the first step with Canara HSBC Life Insurance today!

Glossary

Term Life Insurance Plan – A policy offering financial protection to beneficiaries in case of the policyholder’s unfortunate demise.
Emergency Fund – Savings reserved for unexpected financial crises like medical emergencies or job loss.
Retirement Planning – Financial strategies to ensure a stable income post-retirement.
Public Provident Fund (PPF) – A government-backed, tax-free long-term savings scheme.
National Pension System (NPS) – A retirement savings plan offering market-linked returns and tax benefits.

FAQ

Unlike salaried employees, self-employed professionals lack employer-sponsored insurance. A term plan ensures financial security for the family in case of an untimely demise.

A general rule is to choose coverage 10-15 times your annual income to ensure adequate financial security for your family.

Yes, term insurance premiums are eligible for annual tax deductions under Section 80C of the Income Tax Act.

Most insurers offer a grace period. If you fail to pay within this period, the policy may lapse, and benefits will be lost.

Yes, health insurance is essential for covering medical expenses, ensuring that you don’t dip into your savings.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.