​​​Life Insurance Options for the Self-Employed

Key Takeaway

Universal Life insurance policies can be a good option for self-employed individuals because of their flexibility, permanence, and cash value earnings potential. It can allow you to adjust your premiums and benefits with life’s changes–which can occur quite frequently if you’re managing your own business or employment. 

Image of desktop computer on desk with image of dog on screen. Life insurance options for self-employed

Why Life Insurance Matters

Life insurance is useful for many people, but perhaps even more so when you’re an entrepreneur, freelancer, or contractor. Unlike employees, self-employed individuals may not enjoy certain benefits that would generally be provided with a traditional job, so it may make sense to put in an extra form of protection to help you weather the possible storms life throws at you.

Having life insurance helps safeguard you and your loved ones in case something unfortunate happens. Plus, with policies like universal life insurance, you can also take advantage of cash value accumulation and flexible premium payments. The values that you accumulate can be accessed via loans and withdrawals, subject to policy limitations, giving you flexibility down the road! Learn more about life insurance solutions.

Universal Life Insurance and the Self-Employed

Universal life insurance can offer more control relative to other types of life insurance policies, which can make it ideal for self-employed individuals. Here are some of the reasons why we feel it could work best for self-employed individuals:


Universal life insurance is generally a very flexible policy. You can typically adjust premiums and add benefits (if you qualify) depending on what you can afford, which is useful when you’re self-employed and experience fluctuating income. If you think your income may fluctuate from quarter to quarter, or year to year, the premium flexibility of universal life can provide you with the type of flexibility you may need to keep your life insurance in force.

You can design your policy to provide coverage for as long or as short of a period as you like. Universal Life has an advantage over term insurance because in most circumstances, you can change the horizon of your Universal Life policy by simply changing the funding pattern of the premiums paid into the policy. Keep in mind, that even though you have this premium paying flexibility, you must keep enough value in your contract to fund the charges that are required to keep your policy in force.

Account Value

Universal life insurance accumulates account value, or cash value, with the flexibility of choosing a fixed rate of interest declared by the company, or by taking additional risk by exposing your cash value growth to various investment options. Fixed Universal Life will get a credited rate as declared by the company. Indexed Universal Life allows you to take some risk by exposing your cash value growth to a specific index within the market, with more upside potential but with additional risk of low growth if the market does not grow. Variable Universal Life introduces more risk by passing all investment risk to your cash value – giving you even more upside potential, but exposing you to potential market downswings.

The options available in the market allow you to tailor your cash value growth options to your personal risk tolerance, and you typically can change those allocations over time with certain types of universal life policies as your risk appetite changes.


Universal life insurance can offer more price flexibility than other life insurance policies. You can tailor your policy to be lower-cost with a focus on death benefit protection, or higher premium to allow for cash value growth. However, the flexibility does require you to ensure that you fund your policy adequately so that it doesn’t lapse due to the charges in the policy that cover the company’s costs and risks.


With universal life insurance, you may be able to withdraw your cash value or take out a loan when you need cash. This is especially helpful during financial hardships or emergencies. Note that withdrawals and loans can have tax implications and may impact your policy’s death benefit and how long it will stay in force.

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The information above is for educational use only and does not represent insurance, tax or legal advice. It is not a recommendation or solicitation to buy insurance. Please talk to your licensed insurance agent for more information about life insurance and your needs. Please consult with the appropriate professional for tax or legal advice. Guarantees are backed by the claims-paying ability of the issuing insurance company.

Article Author: Meredith Bell
Author Bio: Meredith joined Everly in 2022 and has 20+ years of experience in the life insurance industry. She has held various roles in advertising, marketing, communications, sales and distribution support, and product development. Outside of the office, Meredith lives with her daughter Kennedy and their dog Mavis. Meredith enjoys cooking, camping, gardening, hiking, and bourbon (though not always at the same time). She is a live music enthusiast and an avid reader. Her favorite quote is by Thomas Jefferson: "I cannot live without books." Meredith agrees, but would add cheese, movies, and dogs to that list.

Policies are issued by Everly Life Insurance Company (“Everly Life”), Topeka, KS. Everly Life is not licensed in the state of New York and does not solicit or transact business in New York.

A.M. Best's 15 ratings are a measure of claims-paying ability and range from A++ (Superior) to F (in Liquidation). Ratings are current as of January 25, 2024 and subject to change at any time. While ratings can be objective indicators of an insurance company's financial strength and can provide a relative measure to help select among insurance companies, they are not guarantees of the future financial strength and/or claims-paying ability of a company and do not apply to any underlying variable portfolios. The insurance agency from which a policy is purchased, and any affiliates of those entities, make no representations regarding the quality of the analysis conducted by the rating agencies. The rating agencies are not affiliated with the above-mentioned entities, nor are these entities involved in any rating agency's analysis of the insurance companies.

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