Life insurance for the self-employed and business owners
No employer plan to fall back on: sizing coverage on variable income, key person insurance, buy-sell agreements, SBA loan requirements, and how taxes work for owners.
Self-employed & business owners
For freelancers, 1099 contractors and business owners with no group plan, or who need coverage for a partner, a loan or a key person.
Check business owner optionsFree · No obligation · Licensed agents
Guides
Small Business Owners by the Numbers: The Coverage Gap
The U.S. has 36.2 million small businesses, and 82.3 percent of them have no employees, according to the SBA Office of Advocacy's 2026 report. BLS data show a combined 9.8 million people were unincorporated self-employed in 2025, and only 40 percent of private-sector workers at establishments with fewer than 50 workers had access to employer life insurance in March 2026.
Editorial Team · September 30, 2026
Does an SBA Loan Require Life Insurance? SOP 50 10 Rules
Sometimes. Under SBA SOP 50 10, life insurance is required when a Standard 7(a) or 504 loan is not fully secured by collateral and the business is a sole proprietorship, a single-member LLC, or otherwise depends on one owner. The lender must get a collateral assignment of the policy, and you pay the premiums.
Editorial Team · September 30, 2026
Best Life Insurance for Self-Employed People (2026)
The best life insurance for a self-employed person depends on what you need to protect: Banner Life and Protective publish level term up to 40 years for income and debts, Northwestern Mutual lets term owners convert to whole life regardless of health, and Guardian, MassMutual and Principal publish key person and buy-sell planning for business owners. We compared six insurers using their own published terms, ratings and NAIC complaint data.
Editorial Team · September 30, 2026
Is Life Insurance Tax Deductible for Business Owners?
Usually not. Federal law bars a deduction for life insurance premiums whenever you or your business is directly or indirectly a beneficiary, and a sole proprietor's policy on their own life is a personal expense. The main exceptions are premiums a business pays as employee compensation, such as group-term life coverage or an executive bonus plan where the employee's family is the beneficiary.
Editorial Team · September 30, 2026
Key Person Life Insurance: How It Works and How It's Taxed
Key person life insurance is a policy a business owns on an owner or employee whose death would cost it money; the business pays the premiums and receives the payout. Premiums are generally not deductible, and the payout stays fully income-tax free only if, before the policy is issued, the business gives the insured written notice and gets their written consent, and an exception in IRC section 101(j) applies; the business also reports the policy on Form 8925 each year.
Editorial Team · September 30, 2026
Life Insurance for Self-Employed People: How to Get Covered
If you work for yourself, no employer plan covers you, so the life insurance your family relies on is the policy you buy. Many self-employed people start with an individual term policy sized to their net profit, debts and business obligations, then add business-owned coverage such as key person or buy-sell insurance if others depend on the business.
Editorial Team · September 30, 2026
Buy-Sell Agreement Life Insurance: Cross-Purchase vs. Redemption
A buy-sell agreement sets who buys a deceased owner's share and at what price, and life insurance supplies the cash. In a cross-purchase plan the owners insure each other; in an entity redemption plan the company owns the policies, and after Connelly v. United States (2024) those company-received proceeds can raise the value of the deceased owner's shares for federal estate tax.
Editorial Team · September 30, 2026
Common questions
How do self-employed people qualify for life insurance?
The same way employees do — health, age and lifestyle drive the price. For larger amounts, insurers may ask for tax returns to confirm income, since there is no pay stub.
Check business owner optionsCan my business pay for my life insurance?
It can, but premiums for a policy that benefits the business are generally not deductible, and some arrangements have tax consequences for you. Talk to a tax professional about your structure.
Check business owner options