Why Is Life Insurance Important for Self-Employed?


Approximately 63% of the UAE working professionals prefer to be self-employed, which can be a notable proportion. However, being your own boss or running a home business means you do not have the same benefits and perks as company employees in terms of group coverage. As a result, it becomes even more crucial to prioritize safeguarding yourself with protection such as life insurance.

Being self-employed comes with risks, and if an unexpected event were to happen to you, your family could face financial burdens. That’s where life insurance plays a crucial role. Having a insurance policy can provide peace of mind, knowing that your loved ones will be financially protected in case of your untimely demise.

When you leave your job to become self-employed, your group life insurance cover is cancelled by your employer. It is generally not advisable to forgo life insurance altogether. Here are some reasons why:

Life insurance

People Count on You

The unexpected death of a loved one can have devastating emotional and financial consequences. If you do not have life insurance, your absence could leave your family and others who depend on your income in a difficult financial situation. Without your income, they may struggle to cover basic expenses and may have to rely on government assistance or incur debt to make ends meet. Having insurance can provide a financial safety net to help bridge the gap and ensure that your loved ones are financially supported during this challenging time.

Your Debt Could be Inherited

While not all entrepreneurs take on personal debt or tie their business to their estate, those who do typically aim to repay it as soon as possible. However, separating from such debts may take time. Moreover, some companies may incur debt as part of their regular business expenses. In either scenario, if the entrepreneur passes away before settling these obligations, their family may be held liable. A life insurance pay out can provide a solution to resolve these financial responsibilities.

Business Continuity

Life insurance can be utilized to fund a buy-sell agreement between business partners or co-owners, providing a seamless transfer of ownership in the unfortunate event of one partner’s death. This strategic approach helps avoid any potential disruptions to the business operations and ensures its uninterrupted continuity.

You need a successor for your family business

To ensure the continuity of a family business after one’s passing, options include having a family member take over or hiring a qualified individual. However, both scenarios may require time for transition and financial resources. Life insurance proceeds can provide financial support to cover these unforeseen costs. Not only that, business partners of the business can take solace in the fact that even though the owner of the business has passed away, the insurance pay out will ensure the financial stability and continuity of the company.

Estate Planning

Life insurance can also be used as a part of your estate planning strategy to provide liquidity for paying estate taxes, debts, and other expenses so that your estate can be distributed as per your wishes.

While it might be hard for self-employed professionals to prioritize life insurance cover over other competing business needs, life insurance is important for self-employed individuals as it provides financial protection for their loved ones, helps ensure business continuity, covers debts, aids in estate planning, offers affordable coverage and provides peace of mind. It’s essential to assess your specific needs and work with a qualified insurance professional to determine the right type and amount of life insurance coverage for your individual situation. Contact New Age Insurance Brokers at +971 4 3573378 or write to  info@newageib.com and talk to experts to find the best coverage for your specific situation.