- You need life insurance if you have dependents or people who’ll inherit your debts.
- Life insurance can be worthwhile even if you don’t have dependents.
- Consider your situation, needs, and budget before purchasing life insurance.
- Compare life insurance online in minutes with Everyday Life Insurance.
Life insurance protects your loved ones from a financial crisis if you pass away early. Insurance is necessary if you have people who financially rely on you. But it can also be advantageous even if you don't have dependents. Read to discover signs you need life insurance and how it can benefit you.
When life insurance is needed
If you're wondering who needs life insurance, the most significant giveaway is that you have dependents. Life insurance ensures that those near and dear to you are cared for financially.
You have dependents
An unexpected death could spell hardship for your dependents. Life insurance replaces your income so your loved ones maintain their current standard of living, even after you pass away. These are examples of dependents who may benefit from your life insurance policy.
- Spouses
- Children
- Adult children with disabilities
- Elderly parents
- Domestic partners
- Business partners
- Other relatives who rely on you
You have significant debts
If you share debts with someone else, life insurance can pay for them when you're gone. For example, if you have signed a mortgage with someone else, your death could make those payments unaffordable for the other person. This could mean losing the home if your partner defaults on payments.
If your loved one defaults on other shared payments, they could face repercussions like damage to their credit score and repossession of their assets. Life insurance gives you the peace of mind that your beneficiaries won't have to deal with those outcomes.
You want to leave a financial legacy
You may still want life insurance even if you don't have dependents. Instead, you can designate a charity or nonprofit organization as the beneficiary of your policy. Additionally, you can use your life insurance to leave an inheritance, say for your adult children or spouse.
When life insurance is beneficial
If you don't have dependents, life insurance could still be beneficial. Covering end-of-life, retirement and long-term care, and estate planning expenses are a few reasons to get life insurance.
Final expenses
Life insurance can pay for your end-of-life expenses so your loved ones can grieve your death properly. Examples of final expenses include but aren't limited to your:
- Funeral service
- Casket or urn
- Burial plot
- Cremation
- Transportation
- Outstanding medical bills
Retirement and long-term care expenses
Permanent life insurance policies build cash value. Unlike your death benefit, you can withdraw or borrow from your cash value within your lifetime. Policyholders may use it to supplement their income in retirement or pay for long-term care if they become chronically ill or disabled, particularly due to age.
Estate planning expenses
Your beneficiaries could incur hefty taxes and fees when inheriting a large estate. Your beneficiaries can use the proceeds of your policy to pay for those costs, as generally, life insurance isn't taxable.
When life insurance isn't needed
Life insurance is an important tool for many people, especially those with dependents. However, there are certain instances where insurance may not be necessary or economical.
You have no dependents and minimal debt
Life insurance primarily protects those who rely on you financially. So, if you don't have dependents or debt cosigners, you may not need life insurance.
Even if you have no dependents and minimal financial obligations, having a policy could still be a good idea. Waiting too long comes with an opportunity cost. Insurers will raise premiums as you age and start to develop health issues.
Buying life insurance while young and healthy allows you to lock in low rates and insurability. This is especially helpful if you anticipate caring for dependents in the future.
You have significant savings
High-net-worth individuals with minimal debts and significant savings may find that they don't need to pay extra premiums for insurance. This is especially true if you're confident that your dependents are financially secure without your income.
You're approaching retirement age
If you're approaching retirement age and you don't have financial dependents or obligations, life insurance may not be necessary. Even if you have dependents, weigh the cost against the benefit of getting life insurance now before buying a policy.
If you are a senior with health problems, you may see higher premiums on your policy and smaller coverage amounts. Consider looking at alternatives to address your dependent's financial needs, such as saving and investment vehicles or group life insurance.
Do I need life insurance FAQs
If you're young and single, you may need life insurance if you have dependents. If not, life insurance may still be beneficial. Purchasing life insurance while young and healthy helps you lock in competitive rates and your insurability.
Getting life insurance is possible, even if you have health problems. However, this depends on your overall risk profile. An alternative to traditional life insurance is no-medical exam insurance. By opting out of the medical exam requirements, you improve your chances of insurability. However, these policies usually have higher rates and lower coverage limits.
If your spouse has coverage, you'll likely need to buy life insurance if you have dependents. Unless you have joint insurance, each policy only covers one person. So, if you die, your spouse's insurance won't cover you.
The amount of coverage you need depends on your family's financial needs. Use an online life insurance calculator to estimate your coverage needs based on current and future expenses. In addition, you can consult an independent agent or a financial advisor for more personalized advice.
Whether life insurance is expensive depends on various factors, such as age, health, gender, occupation, and lifestyle. The type of coverage also determines the price of your policy. Whole life insurance is significantly more expensive than a term life insurance policy because it offers lifelong coverage and a cash value component.
