Life Insurance
What life insurance options are best for self-employed people?
Self-employed people have the same life insurance options as employees, but with some additional considerations. Term life is the most common choice for income replacement — if you die, your family loses your business income. Key man insurance protects the business itself if a critical owner or employee dies. Buy-sell agreement insurance funds the buyout of a deceased partner's share. Self-employed people can deduct life insurance premiums paid as part of an executive bonus plan (Section 162). An independent agent can structure coverage to address both personal and business needs.
Key Points
- Same personal life insurance options as employees: term, whole, universal
- Key man insurance: protects the business from losing a critical person
- Buy-sell agreement insurance: funds the buyout of a deceased partner's share
- Executive bonus plan (Section 162): premiums may be deductible to the business
- Self-employed income is irregular — consider coverage that matches your actual income
- An independent agent can structure both personal and business coverage