Best Life Insurance for Self-Employed Individuals

Working for yourself comes with tons of advantages: flexible scheduling, no boss and unlimited potential for growth. But with no HR department to bestow you with company benefits, it’s up to you to find and purchase these yourself, including arranging your own life insurance.

The best life insurance coverage for self-employed individuals depends a lot on what you want and need from a policy. Our picks include best choices if – like many people – you prefer term life insurance, along with selections for those who may want a permanent policy (either whole life or universal) that adds an investment component.

There are also recommendations for those who are self-employed as one-person freelance enterprises, and who run small businesses, and so may need coverage that considers the ongoing financial health of their company were they to pass on.

Our Top Picks for Best Life Insurance for Self-Employed Individuals

• Ethos – Best Term Life Insurance for Self-Employed Individuals
• New York Life – Best Whole Life Insurance for Self-Employed Individuals
• Ladder – Best Life Insurance for Freelancers
• Nationwide – Best Life Insurance for Small Business Owners
• State Farm – Best Universal Life Insurance for Self-Employed Individuals

Best Life Insurance for Self-Employed Individuals Reviews

Why we chose it: Ethos, an online insurance broker, offers access to coverage from multiple insurance companies without need for a medical exam, even for its fully underwritten policies. Using a fully online application process, it promises speedier coverage than when applying directly to many, even most, insurance companies – which could be a boon for busy entrepreneurs.

Eligible applicants for fully underwritten term life policies can be between 20 to 65, and coverage can range up to $2 million for people who are under 50.

For those who are older (between 65 and 85) or in less-than-optimal health, or both, Ethos offers guaranteed issue whole life coverage. (That minimum age, though, is higher than that of some other insurers, who offer such assured coverage to those as young as 50.)

All plans include access to free tools to create a will, and also most come with free estate planning tools.

Read our full Ethos Life Insurance full review

Why we chose it: New York Life is a highly rated insurance company that offers whole life insurance with a variety of optional riders. As a mutual insurer, it also pays dividends to its policyholders each year based on the company’s financial success, which can help accelerate the growth in cash value of its permanent policies.

You also have the option, if you so choose, to initially buy a term policy with New York Life and convert it to a whole life policy if your insurance needs change. Another upside is New York Life’s highest possible rating for financial strength from agency AM Best.

New York Life’s purchasing process is, however, a little dated compared to other companies on this list. You’ll have to work with an agent and there are no online quotes.

Read our full New York Life Insurance review

Why we chose it: Nationwide offers booth standout customer satisfaction and features tailored to the needs of small business owners. The latter include a buy/sell agreement, in which your death benefit goes to your business partner and vice versa, and key person insurance, which covers the financial loss to the company after your death.

Nationwide ranks well ahead of the pack in the 2023 JD Power survey of customer satisfaction with life insurance, scoring a full 50 points above the average and edged out only by State Farm. Also like State Farm, it’s a relatively rare insurer that allows bundling discounts if you combine its life insurance with other types of coverage, including its business insurance and personal home, pet and auto policies.

Most Nationwide life insurance plans do require a medical exam, though, and term policies are limited to applicants under 70. Online quotes are only available for term life policies.

Read our full Nationwide Life Insurance review

Why we chose it: State Farm is a standout for customer satisfaction and financial stability that offers three types of universal life insurance. Self-employed couples can also benefit from a joint universal policy with the insurer.

Like Nationwide, State Farm is a relatively rare insurer that allows bundling discounts if you combine its life insurance with other types of coverage, including its business insurance and personal home and auto policies. State Farm offers three types of universal life insurance: standard universal, survivorship universal and joint universal.

If you’re the primary income earner or if your partner is also self-employed, you might want to check out State Farm’s joint universal life insurance. This policy bundles two life insurance plans for a lower overall cost and builds tax-deferred cash value, which can be accessed by either policyholder to invest in a business expense or support retirement. Under joint universal insurance, the death benefit is paid on the first insured — meaning if you pass away, your partner will receive your joint death benefit. This plan can also apply to business partners.
For all its pluses, State Farm is on the pricey side, with premiums that are often higher than competitors in some surveys.

Read our full State Farm Life Insurance review

Why we chose it: Ladder’s flexible coverage allows you to increase or decrease your coverage as your needs change – ideal for freelancers, with their unpredictable incomes. And with premiums starting at just $5 per month, and cancellable at any time, this online company suits self-employed people on a tight budget.

You needn't lose a lot of work time to get a policy. A simple 3-step online application allows applicants to access up to $3 million in coverage, which rises to $8 million if you’re prepared to undergo a full underwriting process. (Ladder works with a number of insurers.).

This is an insurer for the young; no applicants over 60 are accepted. And offerings are limited. Ladder policies are term-only, with no whole life or universal plans, and comes with no optional riders.

Other life insurance for self-employed individuals we considered

In evaluating life insurance companies for the self-employed, the companies above stood out. But three other companies come close to those picks, and may also be worth considering.

Haven Life

Haven Life is a popular choice for no-exam term life insurance. This insurer offers coverage up to $3 million and helpful estate planning resources.

Why it didn't make the cut: Like others that did make the list, Haven is limited to offering term policies. Also, unlike other term-only insurance companies, not all of its policies are available nationwide.

Read our full Haven Life Insurance review

USAA

Why it didn't make the cut: The company’s offerings are limited, including having only one no-exam plan for people 35 and younger. And the USAA website provides few details about available riders and most policies, meaning to learn more you must speak to a representative over the phone.

Policygenius

If you want to compare plans from a range of life insurance providers, consider Policygenius. This insurance broker will help you compare quotes and buy a plan that’s right for you.

Why it didn't make the cut: Because it isn’t an insurance carrier, prices, quotes and policy terms will vary depending on the carrier you choose. We didn't rate Policygenius as an insurance provider, but it can be a helpful resource if you want to compare brands.

Read our full Policygenius review

Guide to Life Insurance for Self-Employed Individuals

If you’re self-employed, you might feel like you don’t have the budget or resources to buy your own life insurance policy. But that’s not the case — life insurance companies offer a wide range of plans for people on any budget, even if they are not a regular employee.

This quick guide will cover what you need to know about buying life insurance as an independent worker, including your options and where best to buy them.

What is self-employed life insurance?

Self-employed life insurance refers to a plan an individual buys for themselves, without employer sponsorship – much as anyone might do, perhaps to supplement the plan offered by their workplace. If you’re self-employed, you may not have access to group insurance commonly offered by employers. Group life policies are often free for employees and don’t require a medical exam, but provide limited coverage amounts.

If you’re new to life insurance, here’s a quick overview of key terms, to help you understand life insurance for beginners:

• Term life insurance: Term life insurance policies cover the policyholder for a preset term, generally between 10 and 30 years. These policies often come with lower monthly premiums and lower coverage amounts than whole life policies.

• Whole life insurance: Whole life insurance policies provide coverage for the length of the policyholder’s life. This is a more expensive type of life insurance than term coverage, in large part because policies also have a cash value component that can gain value over time and from which you can borrow.

• No-exam life insurance: No-exam insurance is a type of life insurance policy that doesn’t require a medical exam. Most no-exam life insurance policies are term policies, and some insurers offer same-day approval on this coverage.

• Universal life insurance: Like whole life, universal life insurance is a type of permanent life insurance, the kind that does not expire and carries a cash value that accumulates over time.

• Insurance riders: Many insurance companies offer optional riders for an additional cost. These may include an accidental death benefit, guaranteed insurability, accelerated death benefit, chronic illness riders and more.

How does life insurance work for the self-employed?

Life insurance for independent contractors and self-employed people works like any life insurance plan. In the event of your death, your coverage amount is paid to your beneficiaries, who can be family members, friends or business partners. That money will help cover your funeral costs and support your loved ones or business.

Some permanent life insurance plans gain cash value over time. Once you have enough cash value accrued, you can borrow against your policy to pay for a child’s education or a business expense, or to supplement your retirement savings. This benefit can be especially helpful for self-employed people who don’t have access to an employer-sponsored retirement plan.

How to get life insurance if you're self-employed

The process of buying your insurance policy varies by policy type and the company you choose. Many life insurance plans require a medical exam. Others offer instant coverage and an online application.

Here’s what you should expect when you start shopping for your life insurance policy.

1. Decide how much life insurance coverage you need

The first step is to determine your needs. Your exact coverage amount and premium will vary depending on a number of factors, but in general, higher coverage comes with a higher monthly cost. So, you’ll want to balance your insurance needs with your monthly budget.

Here are a few questions to ask yourself:

• How many people depend on you financially?

• If you own a business, will it be able to continue running after you pass away?

• Do you have plans for your funeral, and how much will the arrangements cost?

• How much can you budget for life insurance each month?

If you plan on working with an insurance agent, they can help you outline your budget and define your coverage needs before you compare plans.

2. Research the types of life insurance available to self-employed professionals

Take some time to investigate your options and decide if you want term, whole, or universal or life insurance. If you have a spouse or business partner, you may want to consider joint life insurance policies that will support you both.

When debating between term vs. whole life insurance, remember that term policies are more affordable but whole life policies come with benefits like fixed premiums and tax-deferred cash value. Some insurance companies allow policyholders to convert their term policies to permanent life insurance without buying a new plan.

3. Gather documentation to prove your income

To apply for life insurance, you’ll need to prove your income to the insurance company — in order, say companies, to assess the suitability of the death benefit being sought. For some self-employed individuals, this disclosure is easier said than done. It’s smart to prepare your application like you’re preparing to file your taxes. Gather bank statements, pay stubs and tax documents that prove your total income.

4. Seek guidance from a licensed life insurance agent or broker

Insurance can get confusing. If you’re not sure what kind of policy you want to buy or how much coverage you need, consider talking to an insurance agent, online or off. Many insurance companies employ agents across the nation, so you can chat with someone in person or online.

Insurance brokers are another option. Policygenius, for example, is an online brokerage that lets you compare premiums and policy terms from multiple insurance carriers.

You can choose to buy your plan through the broker or go directly to the insurance company. This process can help you save time and potentially money, as you won’t have to meet with multiple agents to compare policies.

5. Complete the application process

Applying for life insurance might seem like a hassle — why do they need so much detailed information?

There’s a reason for all the details. Insurance underwriters determine your coverage eligibility based on your age, health, family history, lifestyle and a handful of other factors. It might seem like a lot of time devoted and data disclosed, but it’s important to provide as much information as possible to get an accurate quote.

Some insurance companies offer a quick quote based on limited information. These can usually be accessed online in a matter of minutes. A final quote takes more time and may require a fuller process known as underwriting.

6. Undergo a medical exam if required

As a part of the underwriting process, the insurance company might require a medical exam before it can offer a final quote. The medical exam gives insurers a clear picture of your health, including potential risk factors like heart disease or diabetes. These procedures are completely private and the cost is covered by your insurer.

The medical exam may incorporate a questionnaire and a non-invasive physical exam. If you don’t want to undergo a medical exam, look for insurers that offer no-exam insurance. (Be aware, though, that the death benefit and premiums for which you qualify for may be less appealing without an exam.)

How We Chose the Best Life Insurance for Self-Employed Individuals

To narrow down the best life insurance companies for self-employed individuals, we looked for a few crucial features. Those features included:

• Accessibility: We looked for insurance companies that offer online application or have positive customer reviews for their application process or processes.

• Financial strength: High financial strength ratings show that an insurance company is unlikely to collapse, go into debt or fail to provide benefits when you require them.

• High customer satisfaction ratings: We looked for insurance companies that have above-average ratings on sites like the Better Business Bureau, as well as the survey rankings of JD Power.

• Policy options: The best life insurance companies offer a range of policy options and riders. Although some of the companies on this list only offer term life insurance, those plans are accessible and customizable.

• Affordability: Life insurance premiums vary for each individual, but we prioritized companies that offer budget-friendly premiums for their value.

Summary of Money’s Best Life Insurance for Self-Employed Individuals

• Ethos – Best Term Life Insurance for Self-Employed Individuals
• New York Life – Best Whole Life Insurance for Self-Employed Individuals
• Ladder – Best Life Insurance for Freelancers
• Nationwide – Best Life Insurance for Small Business Owners
• State Farm – Best Universal Life Insurance for Self-Employed Individuals