Term Life Insurance for Self-Employed People

Written by Matthew Gratt, licensed life insurance agent in 47 states and D.C. (NPN 21590619). Last updated September 27, 2026. Rates below are from the CoverSavvy Term Life Index (average of the lowest quotes from U.S. life insurance carriers), as of March 8, 2026.

When you're self-employed, nobody hands you a benefits packet. You don't have a group life policy at one or two times your salary. No open-enrollment email. No HR desk to ask what happens to your family's income if you're not around to earn it.

You're the HR desk.

That's true whether you're a freelancer, an independent contractor, a sole proprietor or an entrepreneur with a one-person LLC. And it changes two things about life insurance: you buy it yourself, and you size it off a normal year, because self-employed income often doesn't arrive in equal paychecks. (Unless you have a great year every year, which to me, probably means you haven't been in business very long.) It doesn't change the price or the health questions.

The part self-employed people worry about most is proving what they earn. So we'll show you what an insurer's underwriter, the person who decides whether to issue the policy and at what price, actually asks for. It's rarely explained.

To keep it concrete, we'll follow one hypothetical buyer the whole way: Marcus, a 40-year-old self-employed consultant with two kids and a mortgage. Marcus is a hypothetical buyer; the prices below are Index estimates for his age and health class, not a quote.

Jump to: Do you need it? · Which kind · How much · What it costs · Which term · Is it deductible? · No exam? · How to apply

Do self-employed people need life insurance?

Being self-employed doesn't mean you need life insurance. Someone depending on your income does. If that's you, you need it, and you'll be buying it yourself.

Here's the gap. 59% of private-industry workers have access to employer-provided life insurance (BLS, Employee Benefits in the United States, March 2026, Table 5). No employer, no employer plan.

Even employees don't get much. 55% of U.S. workers say they have life insurance through their workplace, and among adults who only have coverage through work, the median basic benefit is "a flat sum of $20,000 or 1x salary" (LIMRA, 2025 Facts About Life Insurance: Workplace Benefits, September 2025).

Marcus is an IT consultant, nine years in: a sole proprietor who files a Schedule C (the sole proprietor's tax form). His wife has a W-2 job, two kids depend on both incomes, and no employer has ever offered him a policy. Our guide to how term life insurance works puts the test simply: term life makes sense if someone would be financially hurt by losing your income. For Marcus, that's a yes. Which kind is the shorter question.

What kind of life insurance is best when you're self-employed?

You have lots of options, but we always start with level term. Which company is a separate question, and you answer it by comparing quotes. Cash values are money that accumulates inside a permanent policy; term doesn't have them. As the NAIC (the association of state insurance regulators) notes, "Most term policies don't build up cash values that you can use in the future." When the term ends, in the NAIC's words: "Most term life insurance coverage can be continued ('renewed') at the end of the term, even if your health has changed. If you renew a term policy, the new premiums are higher."

One tax fact about the policy itself: term pays a lump-sum death benefit that is generally free of income tax (26 U.S.C. §101(a)(1)). This isn't tax advice; talk to your CPA.

Marcus's need ends when his kids are through school and the mortgage is paid. That's a term. For the full comparison, see term vs. whole life insurance, which also covers what happens if you outlive your term.

How much is the longer question, and it's where self-employment first matters.

How much life insurance does a self-employed person need?

Start with the regulators' questions. The NAIC Buyer's Guide says "How much life insurance to buy depends on the financial needs that will continue after your death." It asks: "Does anyone depend on me financially? How much of the family income do I provide? How will my family pay my final expenses and repay debts after my death? … If I have life insurance through my employer, is it enough to meet my financial obligations?"

The phrase insurers use for the income they size against is earned income (details below).

Three things are different when you're self-employed.

Size off a normal year. 58% of self-employed adults report month-to-month income variation (Federal Reserve SHED, May 2026). Marcus's net has ranged from about $70,000 to $120,000 over three years, so $95,000 is the anchor. Run the worksheet below off his best year, $120,000, and it lands at about $1,250,000. That's the wrong anchor for a variable income.

Insurers cap what you can buy; they don't tell you what to buy. At 40, most carriers' underwriting guides cap total personal coverage at roughly 25 to 35 times earned income. The guides treat that as a maximum, and one says "the underwriter may modify" it. Buy what you need. For Marcus, the ceiling is well above it.

"10 to 12 times income" is a rule of thumb. The NAIC's guide states no multiple, and LIMRA's fact sheet says only "far less than experts recommend." For Marcus it lands near the worksheet below, which makes it a decent sanity check. We built a great life insurance needs calculator for exactly this, so check that out as well.

Table 1. Marcus's needs worksheet (age 40, sole proprietor, normal-year net income about $95,000)

Needs-worksheet illustration, not a rate table; the two premium rows are CoverSavvy Term Life Index figures, as of March 8, 2026, age 40, $1,000,000, 20-year term, preferred-class non-smoking. Marcus is a hypothetical buyer; every input above the premium rows is hypothetical. Rates shown are a composite of quotes from multiple insurers and reflect Texas market rates; not all policies on which these figures are based are available in all states. Every insurer in the index is rated A− (Excellent) or better by AM Best. These are estimates based on current published rates — your final price depends on underwriting, which is why the next step is getting an actual quote.

The term life insurance calculator replaces income to age 65 and nets out estimated Social Security survivor benefits, so it lands higher for Marcus. If its number fits your budget, get a quote for it; if not, get a quote for $1,000,000. It has one income field, so enter your normal-year figure.

Is $100,000 enough life insurance? For Marcus, about one year of income, so no. Is $20,000 enough for life insurance? That's the median workplace basic benefit LIMRA reports; for a household that depends on the income, no. Is $300,000 enough for life insurance? For Marcus, the mortgage balance and nothing for the years his kids depend on his income, so no. For someone with no dependents and no shared debts, possibly yes.

Marcus's premium is one cell of a table. Here's the rest of it.

How much does term life insurance cost for self-employed people?

There's no "self-employed rate." Price comes from age, sex, health class, amount and term; none of the underwriting guides from more than a dozen U.S. insurers (2021–2025 editions) lists self-employment as a rating factor. (Hazardous occupations can be; different topic.) So the cheapest term life insurance for a self-employed person is the cheapest for anyone: the best health class you qualify for, at the shortest term that covers the need.

It's also less than most people guess. When LIMRA and Life Happens asked healthy adults 18 to 30 what a $250,000, 20-year term policy would cost them, they overestimated "about 10–12 times more than its true cost" (2025 Insurance Barometer Study).

Here's $1,000,000 of 20-year term by age, preferred-class, non-smoking, from the CoverSavvy Term Life Index as of March 8, 2026.

Table 2. $1,000,000 of 20-year term life insurance by age (preferred-class non-smoking, monthly)

Rates shown are a composite of quotes from multiple insurers and reflect Texas market rates; not all policies on which these figures are based are available in all states. Every insurer in the index is rated A− (Excellent) or better by AM Best. CoverSavvy Term Life Index, as of March 8, 2026. These are estimates based on current published rates — your final price depends on underwriting, which is why the next step is getting an actual quote. Marcus is a hypothetical buyer; the age-40 row is his cell.

Health class is the biggest lever you control. If the insurer classed Marcus as standard rather than preferred, his $1,000,000 policy would run $96.64 a month instead of $60.81 ($75.81 instead of $49.88 for a woman; age 40, 20-year term, Index March 8, 2026). That's $35.83 a month more for a man (our arithmetic, not an Index figure). What moves it is build, blood pressure and family history. How he earns a living doesn't.

How much is a $1,000,000 life insurance policy a month? $60.81 for a 40-year-old man or $49.88 for a woman, 20-year term, preferred-class non-smoking (CoverSavvy Term Life Index, March 8, 2026). Here's the same policy at smaller amounts, in both health classes.

Table 3. Same policy, different coverage amount and health class (age 40, 20-year term, monthly)

Rates shown are a composite of quotes from multiple insurers and reflect Texas market rates; not all policies on which these figures are based are available in all states. Every insurer in the index is rated A− (Excellent) or better by AM Best. CoverSavvy Term Life Index, as of March 8, 2026. These are estimates based on current published rates — your final price depends on underwriting, which is why the next step is getting an actual quote. See full rate tables for age 40. Coverage above $4,000,000 isn't priced in the Index; get an actual quote.

Every age from 20 to 65 has its own page in our term life rates by age.

Amount set, price known. What's left is how long, and self-employment has one thing to say about it.

What term length should a self-employed person choose?

Self-employment changes the amount, not the calendar. Two end dates matter: when your youngest child stops depending on your income, and when the mortgage is gone. Marcus's 7-year-old is 27 at the end of a 20-year term and 37 at the end of a 30-year one; his $300,000 mortgage has about 20 years left. Both dates land on 20.

Going from 20 to 30 years costs $46.72 a month more for a man ($107.53 − $60.81) and $34.23 more for a woman ($84.11 − $49.88); that's our subtraction of the Index figures in the table below, not an Index figure itself. Many term policies can be converted to permanent (lifetime) coverage without new health questions, but the window varies by policy, so check before you buy. Marcus picks 20.

Table 4. Same coverage, different term (age 40, $1,000,000, preferred-class non-smoking, monthly)

Rates shown are a composite of quotes from multiple insurers and reflect Texas market rates; not all policies on which these figures are based are available in all states. Every insurer in the index is rated A− (Excellent) or better by AM Best. CoverSavvy Term Life Index, as of March 8, 2026. These are estimates based on current published rates — your final price depends on underwriting, which is why the next step is getting an actual quote. 25-year terms are omitted because far fewer carriers price them in the Index. See full rate tables for age 40.

One question the self-employed ask more than anyone comes next: can the business deduct this?

Is life insurance tax deductible if you're self-employed?

This isn't tax advice; talk to your CPA about how these rules apply to your own return.

Marcus asked his CPA whether the business could deduct his premium. No. The deduction he was half-remembering was for his health premiums. This isn't tax advice; talk to your CPA.

The statute, 26 U.S.C. §264(a)(1), reads: "No deduction shall be allowed for— (1) Premiums on any life insurance policy, or endowment or annuity contract, if the taxpayer is directly or indirectly a beneficiary under the policy or contract." The regulation, 26 CFR §1.264-1 (quoted in Table 5), treats a sole proprietor who insures against their own death as a beneficiary, so it applies to you. The IRS's guide for Schedule C filers, Publication 334 (2025), chapter 8, lists these premiums as nondeductible. This isn't tax advice; talk to your CPA.

If the business writes the check and you or your family are the beneficiaries, the answer's the same. The deduction self-employed people have in mind is the one for health insurance (26 U.S.C. §162(l)). The one deductible life insurance case Pub 334 lists is "Life insurance covering your employees if you are not directly or indirectly the beneficiary under the contract." S-corporations, partnerships and business-owned policies raise separate questions this page doesn't answer. This isn't tax advice; talk to your CPA.

Table 5. What is and isn't deductible on a Schedule C, in the IRS's own categories

IRS Publication 334 (2025), Tax Guide for Small Business (For Individuals Who Use Schedule C), chapter 8; 2025 Instructions for Schedule C (Form 1040), lines 14 and 15; 26 U.S.C. §§162(l), 264(a)(1); 26 CFR §1.264-1. This isn't tax advice; talk to your CPA about your own return. S-corporation and partnership treatment aren't addressed here.

You may still see Publication 535 cited. The IRS discontinued it after its 2022 edition; the guidance for Schedule C filers now lives in Pub 334. This isn't tax advice; talk to your CPA.

Can you get term life insurance with no medical exam if you're self-employed?

Insurers call no-exam approval accelerated underwriting; each program has its own age and amount caps and its own eligibility list. What follows comes from the underwriting guides of more than a dozen U.S. insurers (2021–2025 editions). What keeps someone out of the no-exam program? A recent bankruptcy and, at most carriers, not being a U.S. citizen or permanent resident; one carrier's list adds a felony conviction and prior coverage that was "rated, ridered, or declined" (charged extra, limited, or turned down). None names employment status or income source. Those lists are for the accelerated program only. Outside it, you apply with full underwriting (the FAQ has specifics). Marcus, at 40 and $1,000,000, is inside the accelerated caps at most carriers in the guides, so no exam is the likely path if his health answers support it. Whether a policy is issued, and at what rate, depends on your answers to the health questions in the application.

Which leaves the mechanics.

How do you apply, and what should you have ready?

Start with the quote, which takes about a minute. The quote flow asks what your work situation is. Answer "Self-employed" and it continues straight to the health, smoker, build and birthdate questions.

The application is the separate, longer step, about 15–20 minutes, and it asks your income, occupation and employer. Have ready your earned income, what you do and for how long, and the coverage you already have with any insurer. If you're applying for a lot relative to your income, have a one-line reason for the amount; one carrier's guide notes that "Results from a comprehensive needs analysis … can make a difference."

On income, state what you actually earned. If last year was unusually low or high, say so, and be ready to explain what a normal year looks like. One insurer's guide uses a three-year average when income fluctuates.

What not to say when applying for life insurance? The NAIC's line: "It's important to tell the truth on the application. The insurance company will check your answers so review the application before you sign."

Many applicants can complete the whole application online with no medical exam. Whether a policy is issued, and at what rate, depends on your answers to the health questions in the application.

Put down your annual income in full dollars, like $80,000 or $60,000, or whatever it may be. Do not put down your hourly wage.

Describe what you actually do — "Self Employed" isn't helpful; "IT Consultant" or "Freelance Stage Designer" or anything else is great.

Carriers price the same person differently; their build tables, family-history credits and lab thresholds don't match. The first quote you get might not be the best one, which is why we show you several. Do it yourself in the quote flow (or see how to buy online), or talk to a licensed agent. Either path works.

Marcus runs the quote on a Tuesday between client calls and applies that evening with "$95,000" and "IT consultant, sole proprietor, nine years." He expects a database report he'll never see.

Term life insurance for self-employed people: FAQ

Sources

We cite primary and institutional sources only.

• U.S. Bureau of Labor Statistics, Employee Benefits in the United States, March 2026 (news release USDL-26-1534) and Table 5, Life insurance benefits: access, participation, and take-up rates, September 25, 2026.
• Internal Revenue Service, Self-Employed Individuals Tax Center.
• LIMRA and Life Happens, Adults Age 30 and Younger Overestimate Life Insurance Cost by 10–12 Times, 2025 Insurance Barometer Study, June 25, 2025.
• LIMRA, 2025 Facts About Life Insurance: Workplace Benefits, September 2025.
• Board of Governors of the Federal Reserve System, Economic Well-Being of U.S. Households in 2025, "Income Variability," May 2026.
• National Association of Insurance Commissioners, Life Insurance Buyer's Guide.
• 26 U.S. Code § 264(a)(1), Cornell Law School Legal Information Institute.
• 26 CFR § 1.264-1, Cornell Law School Legal Information Institute.
• 26 U.S. Code § 162(l), Cornell Law School Legal Information Institute.
• 26 U.S. Code § 101(a)(1), Cornell Law School Legal Information Institute.
• Internal Revenue Service, Publication 334 (2025), Tax Guide for Small Business (For Individuals Who Use Schedule C), chapter 8, for use in preparing 2025 returns.
• Internal Revenue Service, 2025 Instructions for Schedule C (Form 1040), lines 14 and 15.
• Internal Revenue Service, Guide to business expense resources (notice that Publication 535 was discontinued after the 2022 edition).
• Underwriting guides published for agents by more than a dozen U.S. life insurers, 2021–2025 editions (agent-distributed documents, not publicly linked; insurer names withheld).
• CoverSavvy Term Life Index, as of March 8, 2026 (term life rates), and the CoverSavvy term life insurance calculator (assumptions as described).