How to Insure and Invest for Self-Employed People

When you work for a multinational company or any big company your employer pays to make sure that you and all the employees have health cover and life cover. Being employed with a company gives your insurance benefits along with a steady income. Self-employed people do get the same benefits as they are their own boss. With so much work pressure and constant stress self-employed people usually overlook or neglect the importance of buying insurance.

So if you’re self-employed and don’t know how to start your insurance journey then let us help you.

Here are some essential plans and policies that you need to invest in, in order to secure your finances.

1.  Life Insurance: This is the first and foremost investment anyone should make. Life Insurance Plans are an investment everyone should make. It is the first step to your financial planning. It should be treated more as an investment than an insurance policy. When choosing life insurance one should opt for term insurance as it comes with low risk and high coverage. A life insurance premium is something you should add to your monthly saving plan. The life insurance claim that you receive on maturity of the policy is tax free subject to applicable terms and conditions.

2.  Unit Linked Investment Plan (ULIP): ULIPs are a great way to invest your money. They provide insurance cover as well give you returns through equity. This plan provides life risk coverage. It can provide between 5-11% returns, but they are not guaranteed. The ULIP should be held for maximum time.

3.  Critical Care Insurance or Cancer Care: Critical or Cancer Care Insurance is a type of health insurance that covers medical expenses of the policy holder in case he/she contracts any of the critical illnesses listed in the policy. Critical illnesses covered include, cancer, heart disease, vital organ failure and even disability.

4.   ELSS Tax Saving Mutual Fund: Mutual funds are the best way to invest your money for long term benefits. They offer the highest returns compared to any other tax saving investment plan in the country. The returns are not guaranteed but if you can afford to take some risk, your earnings can range between 12 – 15%.

5.  Bond: Purchasing bonds of a particular company is like giving that company a loan. The company will pay you interest on your loan. In the case of some companies the interest can be as high as 10% or 12% p.a. These bonds usually have a maturity of 10 to 15 years.

What One Can do to Pay Lower Premium for your Term Life Insurance

We can’t help growing up, but is there such a thing as growing up too fast? Are there ways or things that we do or eat in our day to day life that contribute us aging faster than we normally should? Can our lifestyle or habits really cut short our lifespans? The answer to all these questions is yes. Your lifestyle choices can have a bad effect on your health and in turn on your life span. Not only that but habits like smoking or drinking also have an adverse even on your life insurance premium.

Yes, it’s true, if you’re a smoker and you buy a term plan, your terms and premiums can be starkly different than those of a non-smoker. This is all because a smoker is more likely to contract diseases like respiratory illness and complications, COPD, emphysema, stroke, hypertension, heart disease and cancer (mostly lung cancer).

If you’re a smoker and wish to reduce your term life insurance premium, here are some things you could do, apart from quitting smoking of course.

1.  There is no such thing as an occasional smoker. Almost all insurance companies classify smokers from non-smokers with this simple rule. If you have used tobacco in the last 12 months you are classified as a smoker. So if you wish to apply for a term plan or any other form of Life Insurance, it’ll be a good idea to abstain from smoking for at least 12 months.

2.     There are insurers that are more open to insuring smokers than others. The population that smokes is huge in India and every year it only keep going up. Although the claim risk is very high, insurance companies still go ahead and offer insurance to the smokers. Some organisations attract the smokers aggressively because they offer comparatively lower premium amounts. Look for an organisation that offers a health insurance policy that suits your needs.

3.  There are programs called smoking cessation programs that are offered by insurance companies and employers alike. These programs can help reduce your term insurance premium a great deal. The catch here is that you need to abstain from smoking for at least two years for you insurance premiums to go down significantly.

4.    If you wish to quit smoking after you’ve already purchased a Term Plan then you can notify your insurance company about the same and ask for a review every year that your policy is active in order for them to lower your premiums.