Insurance for Self-Employed Individuals

February 14, 2023
A self-employed woman considers her insurance.

If you are self-employed, there is a solid chance that you run a work-from-home business that falls under a sole proprietor legal structure. While there can be several benefits to working this way, insurance coverage can be complex, especially if you are new to self-employment. If you are in the market for protection options for self-employed individuals, check out the guidance below.

Insurance for Self-Employed Types

When it comes to insurance for self-employed types, there are several options to consider. What you ultimately choose will depend on your individual needs. Before you make a decision, make sure you compare your options carefully. Do not hesitate to ask questions to clarify anything that you do not understand. Insurance policies are not always straightforward when it comes to being self-employed.

Health Coverage
For most freelancers and other self-employed people, health coverage is a top concern. Because most health insurance comes through employers or the government, the thought of going through the process independently can be intimidating at first. Do not worry though!

Term Life Protection
Something else to think about as a self-employed worker is life insurance. In a nutshell, this is coverage that protects your loved ones in case you die. If you work in an industry that presents significant safety risks such as private security, this may be particularly important to have.

Business Insurance
Depending on the legal structure that you establish for your self-employment, it may also be necessary (or at least wise) to purchase small business insurance coverages as well. This is especially true if you work with a significant number of customers.

Self-Employed Life Insurance Tips

If you are thinking about life insurance for self employed individuals, there are some things you should keep in mind.

Choose Term Life Coverage
Life insurance does not need to break the bank. Instead of paying for expensive insurance that covers your whole life, take out a term life insurance policy that protects you for a specific amount of time.

Estimate How Much You Will Need
Use the D.E.B.T. formula to figure out potential expenses:

  • Debts
  • Income replacement costs
  • Mortality and burial costs
  • Education for dependents

By calculating these factors, you can estimate how much money you might need.

Purchase a Term Life Insurance Policy Worth 10–12 Times Your Annual Income
Often, estimating income when you are self-employed is challenging due to the realities of unpredictable factors. With this in mind, it can be wise to purchase a term life insurance policy that is worth much more than your actual annual income.

Discuss With a Trusted Advisor
Once you feel ready, discuss your initial thoughts on your insurance needs as a self-employed individual with a trusted advisor.

Self-Employed Health Insurance Options

With health insurance as a self-employed business owner, you generally have two routes to choose from. One, you can pick from the private marketplace, or two you can select health coverage from the federal or state marketplace for your area. Depending on the providers in your location, there may or may not be many plans for health insurance for self employed individuals.

Health Savings Accounts
Something else to consider is a health savings account or HSA. As a type of personal savings account that you can set up to pay certain health care costs, HSAs can help you pay for various medical expenses such as deductibles, copayments, coinsurance, and more. Usually, they cover everything from acupuncture to hearing aids and psychiatry sessions.

Premium Tax Credits
If you choose to enroll in a Marketplace plan for self employed health insurance, you may also qualify premium tax credit based on your income, which can reduce your premium amount on a sliding scale. With many insurance options for self-employed people, enrollees can deduct health insurance premiums at the end of the year.

Health Insurance for Self-Employed Individuals Suggestions
Choosing the right health insurance for self-employed individuals is not always easy, however, there are ways to find the best coverage possible. For starters, look for insurers that have large provider networks and an easy claims process. Also, think about joining an organization that offers more affordable group plan policies. Some large employers offer health insurance options to even part-time employees. If a side gig is your style, this might work well for you. Depending on your income, federal programs such as Medicaid may also be available. Other tips to keep in mind include:

  • Starting a healthcare savings account
  • Comparing local insurers as well as federal program options
  • Talking to any colleges or universities that you may be a part of to see if they offer cover options
  • Looking into your spouse's insurance coverage options

No two situations are the same, so it is always worth asking a potential insurer about what options may be available to you.

Working as a self-employed contractor or freelancer can have numerous benefits but ensuring that you have reliable insurance coverage is necessary for your overall wellness and long-term success. Contact Acrisure today with your questions about sole proprietor business insurance options.


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