Life insurance when you work for yourself
There's no group policy quietly covering you. That's the whole problem.
Employed people usually have some life insurance through work without thinking about it. Self-employed, freelance, and gig workers have none, and often don't register the absence.
There's also a documentation problem: underwriters want to see income, and self-employment income is less legible than a salary.
The coverage gap is total
No group life, no employer-paid disability, and generally no benefits department reminding you. Whatever coverage exists is coverage you arranged.
That makes the individual policy the whole plan rather than a supplement, which usually means sizing it larger than an employed person would.
Documenting income for underwriting
Insurers assess how much coverage is justified against income. Self-employment income needs evidencing, and the figure they work from may be net rather than gross.
- Two or more years of tax returns
- Profit and loss statements
- Business bank statements
- Contracts or retainers showing ongoing work
- An accountant's letter, where income is complex
The deductions problem
Aggressive deduction of business expenses lowers taxable income, which is sensible for tax and awkward for underwriting — insurers may work from the net figure, limiting the coverage they'll offer.
It's worth knowing before you apply rather than discovering the limit mid-process. If your returns understate your economic position, be ready to explain it with documentation.
Business exposures personal coverage misses
- Business debt you personally guaranteed
- A business partner who'd need to buy out your share
- Key clients or contracts that end with you
- Employees who'd need paying during a wind-down
- Equipment leases in your name
Common questions
Insurers assess coverage against documented income and may work from net rather than gross. Having two or more years of returns and supporting documentation ready makes the process considerably smoother.
They can, by lowering the income figure an underwriter works from. It's worth knowing before applying and being ready to document your actual economic position.
If you have partners, personally guaranteed debt, or employees, personal coverage may not address those. Buy-sell and key person arrangements exist for exactly that.
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This page is general information, not advice about your specific circumstances. A licensed insurance professional can tell you what’s actually available to you.
General information only, not insurance advice. Coverage, availability, and terms vary by insurer and by state, and are subject to underwriting. Quote My Policy LLC is a licensed insurance producer. Nothing here binds coverage.