Affordable Life Insurance for Freelancers

Written by Sonny

Freelancers, who are also referred to as on-demand workers, independent contractors, and temps, have the same everyday risk as traditional employees. They need life insurance, health insurance, auto insurance, and home or renters insurance. The difference for freelancers is that they don’t get life, health, and dental benefits from an employer; they must buy it on their own.

This gigantic freelance workforce has grown to a significant part of the workforce and has even formed an association to support freelancers who no longer want to be traditionally employed. In fact, a survey conducted and published by Edelman Berland stated that there are over 53 million freelancers in the U.S. which represents 34 percent of the U.S. workforce. The in-depth report also calculated that based on current trends, this 34 percent of the workforce number will increase to over 50 percent by 2020.

So then, if this massive group of freelancers needs to purchase life insurance on their own, where is the best place to find the most affordable life insurance for freelancers?

Life Insurance for Freelancers

After reviewing the life insurance that is available from the Freelancers Union, we found that although it is very affordable, there are a lot of fine print items that must be considered and in some cases, the policy may fall short in funding the financial needs of surviving loved ones. Please don’t misunderstand, this is not a negative review of the Freelancers Union life insurance offer, just an argument that you should be able to find affordable coverage on your own.

If you compare the rates for a 30-year old male non-smoker, a $500,000 term policy through the Freelancers Union is $44.85 per month (they don’t state the term of the policy – we assumed 30 years), but that same policy can be purchased in the private insurance marketplace for $32.59 per month. The savings for the term of the policy amounts to about $4,500.

How Much Life Insurance do I Need?

To determine how much life insurance is going to cost, you must first determine how much you need. You may have heard that “rule of thumb” that you should purchase ten times your annual salary. That’s just plain crazy, and here’s why. If you are averaging $40,000 per year as a freelancer, the “rule of thumb” is to buy a $400,000 policy. What happens if you increase your customer base or raise your rates and begin making $50,000 per year? Do you run out and buy another $100,000 policy? Or, what if you decide to work less for a few years and your income drops to $30,000, do you cancel the policy you have and buy a $300,000 policy? The answer is absolutely not. You get rid of the “rule of thumb” and go with the insurance needs calculator.

The insurance needs calculator helps you calculate your insurance risk (how much you need) based on the liquid assets you have, the debts you have now, the monthly living expenses of your family, and future obligations like college tuition for your children. The reason for this is simple: if you die unexpectedly tomorrow, your income will need to be replaced (unless you’re single with no children). Even if you’re single, you still need life insurance for final expenses that you don’t want to leave family members like funeral costs, unpaid medical expenses, or loans that a friend or loved one may have co-signed on.

To calculate your life insurance needs, use a free online insurance calculator and you will learn how much life insurance it will take to replace your income.

Where can I find low-cost Life Insurance for Freelancers?

In order for you to quickly and safely shop most of the highly-rated insurance companies, your best strategy should be to use an independent insurance broker, and preferably one that has an instant quote engine (quote comparison) on their website.

The most affordable type of insurance to purchase would be Term Life Insurance and you can typically get coverage for up to 30 years at bargain prices. Since life insurance rates are based on the age, health, and lifestyle of the applicant, it’s safe to say that you will never get life insurance cheaper than what it costs today. Every year you put off purchasing your life insurance, the more it will cost. Plus, you risk developing an illness that could substantially impact your rates as well.

When you visit your insurance broker’s website, you can get the information you need about the various types of life insurance and if you choose term insurance you can typically get a quote right then and there. Once you find a product that appears to offer the best solution, it’s time to speak with a licensed agent and get the information you need to make an informed decision.

Remember, your independent agent does not work for the insurance companies he or she represents, they work for you, the prospective clients.

Here are actual rates for a $500,000 30-Year Term Insurance Policy for a male and female non-smoker:
























As you may have noticed, life insurance rates for females are lower than the rates for males. The difference in pricing relates to the fact that women typically live longer than men which gives the insurer a longer opportunity to collect premiums.

What Happens when my Term Runs Out?

Great question! Since you will be purchasing term insurance, you understand that your insurance policy has an expiration date, which means you will become uninsured. There are typically three strategies that policyholders have to choose from:

  1. Most companies will offer a renewal but typically on an annual basis. This means that you can stay insured but your renewal premium will be based on your age at renewal which will be much higher if you look at the chart above. Plus, since you are now covered by an annually renewable policy, your monthly premium will increase every year as you get older.


  1. You can let your policy cancel and then purchase another one that will best meet your needs at your age at expiration.


  1. Most term life insurance policies have a conversion privilege (don’t buy without one). The conversion privilege will allow you to convert all or part of your insurance policy to a permanent insurance policy like Universal Life or Whole Life without having to prove you are still healthy. Since the insurance company sets the rules (timing for conversion) for converting your insurance, make sure you understand when you are allowed to convert your policy when you purchase it. (Recommended Strategy)


In Conclusion

As a freelancer, it is critical that you take charge of your insurance so you can manage your everyday risks and protect yourself and your family. Even though you are unable to purchase employer-sponsored life insurance, you can still find affordable life insurance if you are willing to spend some time online to learn where to find the information you need and an independent insurance broker who will walk you through the process of shopping for the best insurance solution and then submitting your application to the company.

About the author


After spending 25 years in the insurance industry, I reinvented myself into a freelance writer and web designer for the insurance industry. Now I get to talk about insurance instead of having to sell it. I currently write for all types of insurance agents, brokers, and companies.

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