Insurance for the self-employed: What you really need (and what you don’t)

Being self-employed comes with a lot of freedom. You choose your clients, set your own schedule, and build a career on your own terms. But that freedom also comes with responsibility — especially when it comes to protecting your income, your health, and the people who depend on you.

When you don’t have employer-sponsored benefits, it’s easy to overlook insurance or feel unsure about what you actually need. The truth is, a smart insurance strategy doesn’t have to be complicated or expensive. It just needs to be built around your life, your work, and the risks you face.

Here’s a simple guide to help you understand what matters, what’s optional, and what’s worth a deeper conversation.

Start with what matters most: Your ability to earn an income

If you’re self-employed, your income is your engine. If you can’t work because of an illness or injury, everything from paying your rent or mortgage to buying groceries becomes a challenge. This is why disability insurance is at the top of the list for most freelancers and independent professionals.

Disability insurance: You likely need this

Disability insurance replaces part of your income if you’re unable to work due to illness or injury. For self-employed people, this is often the most important type of insurance because:

• No one else is covering your income
• You may not qualify for employer or government disability programs
• Even a short break from work can affect your business
   

A good policy provides monthly income so you can stay financially stable while you recover. You can choose coverage that fits your budget by adjusting the monthly benefit, the waiting period, or the length of time benefits are paid.

Protect the people who rely on you

If you have children, a partner, or other people who depend on your income, life insurance becomes an important part of your planning.

Life insurance: You likely need this if others depend on your income

Life insurance helps your family stay financially supported if you pass away. It can help cover:

• Daily living expenses
• Debt or a mortgage
• Future needs like education
• Business expenses or transitions
   

Term life insurance is usually the most affordable option for self-employed individuals. It gives you strong coverage for a set period of time, with predictable premiums.

If no one depends on your income, life insurance becomes optional unless you have business or debt considerations.

Prepare for the unexpected

As a self-employed person, one health issue can create a big financial setback. That’s why having protection for serious illnesses or health-related costs can make a meaningful difference.

Critical illness insurance: Helpful but depends on your situation

Critical illness insurance pays a one-time lump sum if you’re diagnosed with a covered serious illness, such as cancer, heart attack, or stroke. You can use the money for anything, such as medical bills, living costs, or taking time away from work.

While not everyone needs this coverage, it’s worth considering if:

• You don’t have savings to cover time away from work
• You are a single-income household
• Your family would struggle financially during your recovery
   

Health and dental insurance: Helpful if you have ongoing medical or dental needs

Since you don’t have employer benefits, you may be paying out of pocket for dental work, prescriptions, or therapy. A personal health and dental plan can help reduce these costs and make budgeting easier.

Some self-employed professionals also use health spending accounts (HSAs), which let you cover medical expenses in a tax-efficient way. If you’re incorporated, this can be especially useful.

Protect your business

Your business is often an extension of yourself. Depending on your field, certain types of business insurance may be worth considering.

Business overhead expense insurance: Only needed if your business has fixed expenses

If your business has regular monthly costs like rent, equipment payments, or staff salaries, business overhead insurance can help cover those expenses if you become disabled and can’t work.

This coverage is most useful for consultants with office space, medical professionals with clinics, or service businesses with recurring bills. If your business has very low overhead, you likely don’t need this.

What you don’t need

In a world full of options, it’s easy to feel pressured into buying insurance that isn’t useful for your situation. Here are a few areas where self-employed people often overspend.

Extended or duplicate coverage you already get elsewhere

Some credit cards, associations, or memberships include travel insurance or small health benefits. If you already have coverage, buying extra may not add value.

Complex permanent life insurance if your main need is temporary

Permanent life insurance has long-term benefits for certain financial goals, but it’s more expensive. If your priority is simply protecting your family while you build your business, term insurance is usually the better fit, but it might be worth a deeper conversation. This is where we can help.

Coverage that doesn’t match your income or risk level

Some policies sound good on paper but don’t reflect your reality. For example, buying a high disability benefit when your income is inconsistent may not be the best use of your budget.

How to build a smart insurance plan when you’re self-employed

Here’s a simple way to get started:

1. Understand your risks

Ask yourself:

• If I couldn’t work for three months, what would happen?
• Who depends on my income?
• Do I have savings to fall back on?
• Does my work carry financial or legal risks?
   

2. Prioritize the essentials

Most freelancers benefit from:

• Disability insurance
• Life insurance (if others depend on them)
• Health and dental coverage
   

3. Choose solutions that fit your budget

Insurance should support your financial stability — not strain it. Start with what you can afford today, and build from there as your business grows.

4. Review your coverage regularly

Self-employed income can change quickly. Reviewing your coverage yearly helps keep everything aligned with your current work and financial situation.

You don’t have to do this alone

Insurance for the self-employed doesn’t have to be complicated. When we work with freelancers, consultants, and independent professionals, our goal is simple: help you stay protected in a way that feels clear, practical, and manageable.

There’s no one-size-fits-all answer. But there is a right plan for you: one that reflects your work, your lifestyle, and your goals.

If you’d like help understanding what you really need (and what you don’t), we'd be happy to walk through it with you. Reach out today and let’s get started.