Is Life Insurance a Smart Financial Tool for the Self-Employed — or an Unnecessary Expense?

The rise of the gig economy raises a crucial question: is life insurance a prudent financial safeguard for the self-employed, or merely an unnecessary expense? In an era where financial stability can feel elusive for freelancers and entrepreneurs, this decision carries more weight than most realize.

Why This Matters Now

With over 41 million self-employed individuals in the United States, the stakes are high. Unlike traditional employees, the self-employed often lack employer-sponsored benefits — including life insurance. This makes it imperative to weigh the options critically. The financial decisions the self-employed make today will not only impact their own lives, but the financial security of everyone who depends on them.

Perspective: Life Insurance Is Essential

Robert T. Kiyosaki, Author & Financial Educator

Kiyosaki reframes the conversation from the start. "Many self-employed individuals think of life insurance as just another bill — but it can actually serve as a financial cushion." His argument: life insurance isn't just coverage, it's an asset. It ensures that business debts, personal expenses, and family needs are covered should the worst happen — a safety net that no emergency fund can fully replicate.

Sallie Krawcheck, CEO, Ellevest

Krawcheck adds a dimension the others don't address. Women represent a significant portion of the self-employed, and she argues they face unique risks that make life insurance even more critical. "Without life insurance, self-employed individuals — especially women — can leave their families exposed in case of an untimely death." Gender wage gaps and career adjustments already complicate financial stability. Life insurance, in her view, is a tool for empowerment and planning — not an added burden.

Perspective: Life Insurance Is an Unnecessary Expense

Jeffrey W. Stein, CPA & Financial Advisor

Stein challenges the blanket recommendation head-on. "Life insurance can add unnecessary costs to a self-employed person's budget." His counter-proposal: before committing to any policy, individuals should focus on building an emergency fund, investing in retirement accounts, or diversifying income streams — all of which may deliver a stronger return on the same dollars.

His core argument is one of prioritization: for some self-employed professionals, life insurance simply doesn't align with their financial goals — and no amount of framing it as an asset changes that calculus if the fundamentals aren't in place first.

Editorial Synthesis

Where experts agree

All three experts agree that life insurance can serve as a financial safety net, that financial planning is critical for the self-employed, and that personal circumstances heavily influence whether life insurance is a wise decision for any given individual. Nobody argues the product is worthless — the debate is about whether it's the right priority.

Where experts disagree

Kiyosaki frames life insurance as an asset worth having regardless. Krawcheck emphasizes the unique vulnerabilities of self-employed women as a reason to prioritize coverage. Stein counters that other financial instruments may deliver more value for the same investment — and that life insurance should only enter the picture once those foundations are solid. The disagreement is fundamentally about sequencing: is life insurance a first move or a later one?

TheFacturation's Take

Life insurance is not optional if people depend on your income — full stop. If you have a spouse, children, aging parents, or business partners who would face financial hardship without you, a term life insurance policy is one of the most cost-effective financial tools available. For most self-employed individuals in their 30s and 40s, a 20-year term policy is both affordable and sufficient.

Where Stein is right: life insurance should not come before the basics. If you have no emergency fund, no retirement contributions, and no diversified income, fix those first. A life insurance policy on a financially unstable foundation solves the wrong problem.

The bottom line: if people depend on you financially, get covered — term life, not whole life, and size it to replace your income for at least 10 years. If you're single with no dependents and solid savings, Stein's argument holds. Context is everything.