It’s generally accepted that life insurance is needed when people depend on your income, but what if you’re single? Depending on your situation it might not be needed, but there are still some reasons why life insurance might be worth buying.
The main purpose of life insurance is to provide a lump sum payment to replace your income when you die. If you have no dependents relying on that income, you might be less inclined to purchase life insurance, whereas if you’re a single parent it’s generally strongly recommended. Some reasons for considering life insurance include:
Your debts have co-signers
Some of your debts are discharged when you die, but otherwise your assets might be used to pay down remaining debts through probate, the legal process of administering your estate after you die. Unfortunately a cosigned loan means that the cosigner (typically parents) will be on the hook for the remaining debt. Life insurance, however, can be exempt from creditors, paying out directly to your beneficiary. A life insurance payout can therefore ease the burden of cleaning up your debts after you die.
You have other beneficiaries
Aside from a spouse or children as dependents, you might have other people in your life that could be beneficiaries. Your aging, cash-strapped parents, close friend, or sibling with a disability could benefit your policy, giving you peace of mind knowing they’ll be taken care of when you die.
You won’t be single (or healthy) for long
The two main factors in low life insurance premiums are your age and health, and some medical conditions can increase your premiums or disqualify you from certain policies.
If you’re in your twenties and think a partner or kids could be a part of your long-term future, a life insurance policy purchased while you’re young and healthy will have much lower premiums. This can be especially wise if your parents have or had heritable health conditions like heart disease or diabetes.
Paying for your funeral
When you die, who will pay for your funeral? Dying can be expensive, and if you don’t have life insurance someone else might have to pay for the cost of your funeral, which can cost upwards of $10,000, according to Policy Genius. Your benefits can be used to cover these expenses.
The bottom line: Financial advisors will typically advise you to get life insurance if someone is depending on your income. You might not do so if you’re single, but a decent policy might be within your means if you’re looking for some added protection for those close to you.