When you work for yourself, there’s no employer handing you a group life insurance policy. No HR department setting up benefits. No company matching contributions. If you want life insurance, you have to get it yourself – and most self-employed people in Los Angeles never get around to it.

That’s a problem. Freelancers, consultants, gig workers, and solo business owners often have less stable income and fewer safety nets than traditional employees. Life insurance fills that gap. TermHero makes getting covered as easy as the rest of your job is hard.

Why Self-Employed People Need Their Own Policy

No Employer Coverage to Fall Back On

W-2 employees often get 1-2x their salary in free group life insurance. As a 1099 worker, you get nothing unless you buy it yourself.

Your Income May Be Less Predictable

If something happened to you, your family wouldn’t just lose a salary – they’d lose a business or client base that may be impossible to replace. Life insurance provides the stability your income structure doesn’t.

Your Business Might Have Debts

Business loans, equipment financing, leased office space. If these obligations are personally guaranteed, your family could be on the hook for them.

You’re Harder to Replace

If you’re a freelance designer, consultant, or contractor, your skills and client relationships are uniquely yours. Life insurance gives your family time to adjust without financial pressure.

Coverage Strategy for Self-Employed Professionals

Calculating coverage when your income fluctuates takes a slightly different approach:

  • Use your average annual income over the past 2-3 years as your baseline
  • Multiply by 15-20 years for income replacement (longer than the standard 10x recommendation for employees, since your family can’t rely on employer benefits)
  • Add outstanding business debts that are personally guaranteed
  • Add mortgage and personal debts
  • Add education costs for children
  • Subtract existing savings, investments, and any other insurance

Most self-employed professionals in LA need $1,000,000-$3,000,000 in coverage. A 20 or 30-year term provides long-duration protection at a fixed cost you can budget for.

Income Documentation for Self-Employed Applicants

Carriers will want to verify your income, especially for policies over $1,000,000. Be prepared to provide:

  • Tax returns – Usually the most recent 2 years (1040 with Schedule C or K-1)
  • Profit and loss statements – For your business
  • Bank statements – Sometimes requested for additional verification

If your income has recently increased significantly, some carriers will consider current contracts or earnings statements in addition to tax returns. TermHero knows which carriers are most flexible with income documentation for self-employed applicants.

Potential Tax Benefits

While personal life insurance premiums aren’t tax-deductible, there are scenarios where self-employed individuals can benefit:

  • Key person insurance – If your business pays for a policy on you as a key employee, premiums may be a business expense (consult your accountant)
  • Buy-sell agreements – Life insurance funding a buy-sell agreement can have tax advantages for partnerships and LLCs
  • Tax-free death benefit – The payout your beneficiaries receive is always income tax-free, regardless of how premiums were paid

Talk to your accountant about your specific situation. For key person and buy-sell coverage, see our business owner insurance page.

Frequently Asked Questions

Can I get life insurance if my income varies a lot year to year? Yes. Carriers average your income over 2-3 years. Even if you had a down year, your overall earning history and current trajectory matter. TermHero helps present your financials in the best light.

Do I need to prove my income? For policies under $500,000-$1,000,000, many carriers use simplified financial underwriting with no documentation required. Larger policies will require tax returns or financial statements.

What if I just started my business? You can still get coverage. If you have limited self-employment income history, carriers may look at your previous W-2 employment income or your current contracts. Coverage amounts may be limited initially.

Is this the same as business insurance? No. Personal life insurance protects your family. Business insurance (general liability, E&O, etc.) protects your business operations. You likely need both, but they serve different purposes.

Can I deduct the premiums? Personal life insurance premiums are not tax-deductible. However, if the policy is owned by your business for a valid business purpose, the treatment may differ. Consult your tax advisor.

You Built Your Career Yourself. Build Your Safety Net Too.

No employer is going to do this for you. Take 20 minutes and protect the people who depend on you.

Call (818) 222-2300 or get your free quote