Autonomy, freedom, flexibility - there are certainly perks to being a self-employed individual. However, there are also some disadvantages, mainly not having a benefit plan provided.
You're essentially on your own when it comes to obtaining life, health, disability and other insurance benefits. As a self-employed person, you are placing your family at significant financial risk if you don't own a life insurance policy.
Such a policy would not only provide your surviving family with a monetary benefit if something was to unexpectedly happen to you, but also provide coverage for your debts related to sole proprietorship.
Why it's important for everyone to be covered
Any credible financial expert will tell you that you need the protection of life insurance, whether you're employed by yourself or any other entity. It's even more important if you have a family or loved ones reliant upon your income.
Most people will be able to earn a living and support their family's needs and lifestyle as long as need be. However, unexpected deaths happen every day. Without life insurance, such a sudden event could leave your family in an insurmountable financial crisis.
Imagine for a moment the financial repercussions your family might face should you die without life insurance and they lost the financial support of your income. Would they be able to pay for your burial, funeral and medical bills; maintain their current lifestyle; meet financial obligations like mortgages, car loans, utilities, credit cards; and be able to send children to college?
If questions like the above give you any reason to question your family's financial security, then you need to have an effective life insurance plan in place to ensure that their financial needs and obligations will be provided for should you pass away.
Self-employed individuals need it even more
If you are self-employed, the law doesn't distinguish between your business and personal assets. In other words, you are legally financially responsible, whether that be with personal or business assets, for any and all debts related to your business.
Let's say you are the owner of a sole proprietorship and you die. The business will legally come to an end in the eyes of the law. The losses and/or debts related to your business, such as from business loans; federal, state and local taxes; money due to vendors, contractors, suppliers and employees; lease or mortgage payments; and so forth, are now the responsibility of your estate.
The result - your surviving family could be forced to sell off your personal assets to pay the business-related financial obligations and debts, thereby leaving them with less, if any, money to provide for their ongoing personal financial needs.
Such a scenario can be avoided by having a life insurance plan that will adequately cover both your business-related debts and your family's ongoing financial needs. We can help you determine your life insurance options and which would best fit your unique business and personal needs.