Term Insurance for Freelancers – The Unspoken Challenges

Why Freelancers are Financially Vulnerable?

According to a report by Payoneer, there are over 15 million freelancers in India, contributing to major sectors like IT, marketing, design, finance, education, construction, and more. However, most of these freelancers operate without the financial safety net provided to salaried employees. Why are they more vulnerable? What is the core problem? No employer-sponsored benefits and irregularity in the cash flows make it challenging for freelancers to avail themselves of term insurance coverage.

Why Term Insurance is Crucial for Freelancers?

Not having term insurance can be a costly affair for freelancers. Let us assume you are a freelancer earning INR 1 lakh on average and paying home loan EMI of INR 30,000, Car loan EMI of INR 10,000 and household expenses of INR 35,000. If the income stops due to untimely demise, dependents could face a shortfall of INR 9 lakhs. Without term insurance, the family has to liquidate the existing savings. The following are the main reasons why a freelancer must have term insurance coverage to protect their family’s future.

Income Instability

Consistency in payment is the major problem in the freelance business. This irregularity of income makes financial planning complex for freelancers.

Lack of Employer-Sponsored Benefits

Unlike traditional jobs or career options, there are no automatic, employer-sponsored benefits such as life insurance, health insurance, pension, etc., making it prudent for freelancers to seek term cover.

Outstanding Debts

Freelancers do have obligations like a home loan, a car loan, a business loan, etc. In their absence, families have to pay these outstanding obligations.

Tax Benefits

Term insurance premium qualifies for tax deduction under Section 80C of the Income Tax Act, 1961.

Though there is a notable rise in self-employed people buying term insurance in India in 2025, with around a 58% jump, freelancers still face various challenges that often become hurdles in their insurance-buying journey.

Unspoken Challenges in Buying Term Insurance for Freelancers

The following are unspoken challenges in buying term insurance for freelancers:

Income Fluctuations

As per Remote’s Global Freelancer Report, 62% of freelancers manage irregular income. Irregular cash flows in the freelance business make annual payments difficult. Sometimes, freelancers take a step back in purchasing long-term insurance policies due to fear of skipping or delaying the premium payment.

Lack of Financial Guidance

As per a survey conducted by the Bajaj Allianz Life Insurance, nearly 81% of Indians are underinsured, with only 3 times their income as coverage. Especially, freelancers lack the right financial guidance and awareness, which makes them think term insurance is not a priority. During their 20s and 30s, most freelancers ignore the need for term insurance coverage due to a lack of guidance and sound financial planning.

Documentation Struggle

Insurance companies typically require income proof – formal contracts, IT returns and salary slips. Freelancers with irregular payments may fall short of these documents.

Health Disclosures

Health risks and lifestyle-related illnesses can increase the insurance cost or may lead to policy rejections for freelancers. Flexible schedules, irregular sleep, lack of exercise, and extended screen time of freelancers can lead to early lifestyle-related health risks. However, it is crucial to disclose health conditions honestly while buying any type of insurance.

Lower Eligibility

Insurance companies decide the life insurance coverage based on the annual income of the applicant (typically 10 to 15 times the income). Freelancers with income fluctuations face the risk of lower eligibility when it comes to buying term insurance plans.

Tips to Overcome the Hidden Challenges in Buying Term Insurance for Freelancers

Despite the challenges of irregular income, lower eligibility, health risk, documentation struggle and lack of financial guidance, freelancers can still go for term insurance coverage to safeguard their dependent family members. With insurance companies taking a new approach towards identifying the freelancers’ challenges, here are a few important tips to overcome hidden challenges in buying term insurance for freelancers.

Instead of the annual premium payment, freelancers can go for quarterly or monthly payment of premiums that match their irregular cash flows.

Insurance companies do accept wider proofs and documents, including IT returns, bank statements and client invoices. This helps freelancers with the documentation struggle.

Buy term insurance early to get higher coverage at a lower premium without any health risks.

Customise the term insurance policy as per your specific needs. You can consider riders like accidental death cover, critical illness cover and more.

Review your insurance coverage and upgrade as and when there is a change in need with each life phase.

At Jio Insurance Broking, you can explore various term insurance policies from different insurance companies. Freelancers can compare various policies on the basis of features, benefits, cost and customise them as per their needs.

Conclusion

To conclude, freelancers face various unspoken challenges that often become a roadblock in their term insurance buying decision. However, with insurance companies offering flexibilities in insurance premium payment and customisation options as per the needs, freelancers should understand the critical need for term insurance coverage. Term insurance coverage cannot be an afterthought for freelancers. It is crucial to safeguard the family’s financial future despite the challenges.