Bridging the Gap: Life Insurance for Self-Employed Workers

Self-employment offers freedom and flexibility, but it also comes with trade-offs. One of the biggest is the absence of built-in financial protection. While salaried employees often benefit from group benefits like life, health, and disability insurance, self-employed individuals are left to fend for themselves. For many, that means going without.
This gap represents a clear opportunity for financial advisors to positively impact these courageous individuals. More than 1 in 7 Canadians, representing over 2.6 million people, are self employed according to StatsCan. With the right approach, you can help self-employed clients understand their risks, tailor solutions to their needs, and position insurance as an essential part of their financial resilience. You’ll be solving a real problem and growing your business in a market segment that’s often overlooked.
Why Self-Employed Clients Need a Different Approach
Without access to group insurance, self-employed clients face a unique set of challenges. Here are a few of the most common:
No automatic life or disability coverage
There’s no HR department providing a baseline level of protection. If they haven’t sought out coverage on their own, they may have none at all.
Irregular income and limited financial buffers
Self-employed individuals often deal with cash flow variability. This makes them especially vulnerable to income disruption caused by illness, disability, or death. Without insurance, their families and businesses could face immediate financial hardship.
Solo responsibility
In addition to generating income, self-employed individuals must cover their own medical expenses, retirement contributions, and tax obligations. There’s no employer to share the load. That makes financial shocks harder to absorb.
Greater personal risk exposure
Many self-employed workers rely on personal credit to fund their business. If something happens to them, their debts don’t go away, but their income might. Life and disability insurance can help protect family members from having to cover these liabilities.
In short: these clients have more to protect and fewer built-in safeguards.
Three Ways to Help Self-Employed Clients Protect Themselves
1. Lead With Education and Empathy
Start by acknowledging the reality of self-employment: it’s demanding, it’s unpredictable, and most of the time, the things that demand their urgent attention (like sustaining their business) push out the things that are merely important (like taking the time to sit with an advisor to build financial protection strategies, including insurance solutions).
Help your clients raise insurance up the priority list with questions, such as: What would happen to their business if they couldn’t work for six months? How would they pay their bills and stay on top of their debts? How could this impact their spouse and children?
These are not scare tactics. They’re real-life scenarios that many self-employed families face after a major illness, injury, or death.
Use plain language and real-world stories. Make the invisible risk visible. For many, this is the first time anyone’s asked them these questions. That conversation alone can be a value-add.
2. Offer Personalized, Flexible Solutions
Every self-employed person is different. A freelance designer in their 30s has different needs than a 52-year-old contractor with a mortgage and three kids. Your recommendations should reflect that.
Start with a simple needs assessment. Find out who depends on them financially, what debts or fixed expenses need covering if income stops, and what kind of emergency savings they have for backup. Then consider showing them how coverage can be aligned with these realities:
- Emergency Fund to cover 3 months or more of basic expenses
- Term life insurance to cover dependents and debts
- Disability insurance to replace income if they’re unable to work
- Critical illness insurance to provide lump sum support
- Permanent insurance for long-term estate or tax planning goals
Flexibility is key. Many self-employed clients will be wary of locking into rigid, expensive commitments. Understand how much stable cash flow they can commit to protection solutions, and when they might have excess cash flow available for more robust protection and savings options. Show how policies can be adjusted, layered, or stepped up over time.
3. Explain the Financial and Tax Advantages
Cost is one of the biggest perceived barriers to insurance, and often one of the least well-understood. Self-employed clients may assume coverage is out of reach. You can help reframe the conversation by highlighting these facts:
Tax-free benefits
Life insurance death benefits are tax-free to beneficiaries, making them an efficient way to transfer wealth or pay down liabilities. Critical illness and disability insurance benefits are also generally non-taxable when premiums are paid personally.
Business continuity
Some policies can be owned by the business to fund buy-sell agreements or insure key individuals, often with tax planning advantages. Since most Canadian small businesses pay lower corporate tax rates than individuals, many owners hold life insurance inside their corporation. Premiums are paid with after-tax dollars either way, but the death benefit is tax-free and can largely be paid out of the corporation tax-free as a capital dividend (the death benefit minus the policy’s adjusted cost basis).
Cost of inaction
Help clients grasp the real impact of going uninsured. A six-month disability could mean tens of thousands in lost income, plus added stress, debt, and a setback to their long-term goals. Disability insurance can help cover ongoing expenses during recovery, while critical illness insurance provides a lump-sum payment upon diagnosis of a covered condition, giving clients the flexibility to step back from their business and focus on getting well.
Framing insurance as part of a broader financial strategy, rather than just an isolated expense, can help clients appreciate its value.
A Market Ripe for Growth
Many self-employed people are professionals, tradespeople, or creative entrepreneurs with decent income, but no insurance safety net. These individuals may not be getting regular financial advice. That makes your outreach even more valuable. By focusing on education, personalization, and smart planning, you can build trust with this audience and deliver real, lasting impact.
For clients, the payoff is peace of mind. For you, it’s new business and a growing reputation as an advisor who truly understands how to meet people where they are. And when it comes time to implement your advice, Beneva has your back with life and health insurance solutions that work hard for the self-employed.