By Mira Van
Have you ever wondered how insurance companies calculate premiums and the insured sum of your life insurance policy? While there are many factors that play a part in that calculation, your human life value (HLV) is the most important parameter.
What is HLV?
A human life value or HLV is a parameter that measures the value of your future expenses, liabilities, and investments. Insurance companies use it to calculate how much you are financially worth to your family or how much your absence will cost to your family to make you eligible for the correct insured sum in your life insurance plan.
One of the most important factors that insurers consider in calculating HLV is your annual income. While it is easy to predict your annual income if you are an employee of a company, what happens if you are self-employed?
Can self-employed people get life insurance?
Yes! Insurance companies have acknowledged how the world and career options are fast-changing have changed accordingly.
Here, if you are self-employed, your insurance provider will use factors other than your annual income to come at a conclusion of the maximum life cover you are eligible for.
These factors could include your assets, liabilities and a measure of how much are you providing for your family financially.
So, in short, yes – you can absolutely get a life insurance, doesn’t matter your career choice.
But what are the types of life insurance plans that are available to you? Let’s take a look –
Types of life insurance for self-employed
- Guaranteed savings plan – In a guaranteed savings plan, you can choose a maturity benefit or sum insured and pay premiums according to that. It is not market linked and the insured sum is guaranteed at maturity, hence the name. This will help you ensure that you or your family will receive an amount that you deem adequate at the time of maturity.
- Unit linked insurance plans or ULIPs – In ULIPs, you have the option to gain from the market as your money could be invested in different securities including stocks, debts, bonds etc. ULIP gives you the ability to grow your money through investment markets and hence, it comes with market risks. Make sure you understand markets and take expert help if this is your option.
- Annuity plans – These plans are designed to give you a monthly pension after your retirement and hence, it will allow you to make sure you have a steady monthly income at maturity. And just life any other life insurance policy, your beneficiary is eligible for death benefits as well.
Why is life insurance policy important for self-employed?
A life cover is important for anybody, doesn’t matter their career or financial situation. But a life insurance policy could prove to be extremely important for you if you are self-employed, here are some reasons why –
- It could be an alternative for employer benefits – Employees working in organised sector get several employee benefits like PF, live cover etc. A life insurance cover could help you have some of these benefits when you are self-employed. It makes sure you and your family are financially protected.
- Protection of your family – Unlike a regular employee at a company, your annual income could be very varied every year if you are self-employed. This could cause uncertainties if you ever have to leave your family behind. Here, a life cover does what it is best known for- financial protection for your family if a dire situation ever happens.
- A savings to fall back on – A life insurance policy is not just meant for a life cover; it is savings for you as well. Being self-employed could make your earnings uncertain at times. Here, you can cash out your life insurance in different ways and make sure you are financially fit.
How to buy life insurance for self-employed?
Doesn’t matter if you are an employee of a company or self-employed, the process of getting a life insurance policy is similar. If you are thinking to buy one online, the process gets easier – you just have to go to an insurance provider website, buy an insurance policy you like and provide the necessary details.
To choose what’s best for you, resources like life insurance calculators could be useful.
Start your research and get insured today!
