Term Insurance Gains Traction With Uptick In Self-Employed Persons Going In For Flexible Plans

The self-employed segment has experienced a remarkable 50 per cent YoY growth, now constituting 70 per cent sales from plans tailored for self-employed individuals. This surge is fueled by specific term plans that eliminate the need for traditional income documentation.

The new approach no longer requires Income Tax Return (ITR) or salary proof documentation, broadening access to specialized term insurance plans for self-employed individuals.

Rhishabh Garg, Head of Term Insurance at Policybazaar, says “The significant uptake of term insurance among self-employed individuals is a clear indicator of rising financial awareness. With flexible, specialized plans now available, it’s easier than ever for business owners and freelancers to protect their families and secure their financial futures. We urge self-employed individuals to explore these offerings and ensure they are adequately covered.” Many digital metrics are now used to assess the financial stability of individuals and business owners, particularly when traditional income proofs are difficult to obtain. One key metric is the individual's creditworthiness, evaluated through their credit or loan history. Additionally, surrogate proofs such as the Insured Declared Value (IDV) of a vehicle—reflecting its market value—can be used. In some cases, insurers also reference the GST database to determine the financial health and value of a business.

Leading insurers such as Max Life, Tata AIA, HDFC Life, and Bajaj Allianz have adapted their offerings to meet the specific needs of this growing demographic, significantly expanding access for business owners and freelancers.

Self-employed individuals are increasingly following best practices by securing life insurance coverage equivalent to 10 times their annual income.

For instance, those earning Rs.3-5 lakh opt for Rs. 39 lakh coverage, while higher-income earners (above 10 lakh) select policies averaging Rs. one crore. This demonstrates a growing understanding of long-term financial planning among business owners, despite their variable income.

A striking 74 per cent of self-employed term insurance buyers are aged between 27 and 38, reflecting the proactive approach of younger entrepreneurs in securing their financial future.