Nearly every article or blog post you see about life insurance online includes photos of smiling families with young kids. And much of the time, life insurance calculations talk about providing for your family’s future. This can leave you with the impression that you don’t need life insurance if you’re single and childless. But that’s actually not the case.
In fact, there are plenty of reasons single people with no children might need life insurance. But the good news is you’re probably looking at a much smaller policy. And that means this type of coverage will likely be inexpensive.
Wondering why you should shell out for life insurance coverage if no one depends on you? Here are eight reasons that could apply:
1. Your debts have cosigners
It’s true that some debts, like federal student loans, will disappear when you die. The government will write off these loans if they’re unpaid, and no one will need to pay them. But if you have private student loans cosigned by your parents, it’s a different story. If you pass away while they’re still on the note, they’ll have to cough up the cash.
The same goes for other cosigned debts, whether it’s a mortgage, a car, or a jointly-owned credit card. Any debt that has someone else’s name on it will become their responsibility if you should die. So it’s always a good idea to have at least enough life insurance to cover these expenses.
Resource: What happens to my debt when I die
2. Or you have other debts
What if you have debts that you alone are responsible for? In this case, the debts will be settled out of the proceeds of your estate. This can be a messy situation and can be difficult for whoever is left to pick up the pieces.
Since term life insurance is inexpensive, it’s a good idea to cover all your debts, if possible. That way, your family members or friends can settle the debts out of the life insurance proceeds. Then, your estate is free and clear for them to divvy up according to your wishes.
3. Someone else is depending on you for their future
Maybe you don’t have children, but you know someone else will depend on you for their financial future. This could be aging parents or a disabled sibling. If you’re already planning to help this person financially, make sure you account for that in your life insurance.
This situation is much more like life insurance for parents. You’ll need to figure out how much funding you want this person to have for how many years. Then, add that number on to your life insurance coverage calculation.
4. You own a business with partners
If you have business partners, they also depend on you to keep things going. When you create a partnership, you should always have contractual provisions for keeping the business going if one partner should pass away. But in order to make that happen, each partner may need to commit to putting life insurance funds in to keep the business going.
Things can get pretty complicated really quickly if this is the case. So be sure to talk with a financial planner about this possibility when you start a business.
5. Maybe you want to have kids someday
Let’s say you’re in your early twenties and don’t have kids now, or even want them for a few years. But you’re planning to have children in your thirties. Buying life insurance now could be a great option. The younger and healthier you are, the cheaper a policy will be.
So consider purchasing a 30-year policy now, when it’s really affordable. Then, when you do have children, you’ll already have some coverage in place. Maybe you don’t need complete coverage now. But laying down a base of coverage lets you get it for less. And then you can always add another policy or increase your coverage amount when you have children.
6. You live with a significant other, or even roommates
Does someone else depend on your financial contributions to keep a household running? You may need life insurance to help them out. Whether you live with a significant other or roommates, this could be the case.
This may not be like getting life insurance for a spouse or children, though. You shouldn’t need to replace your income for your housemates for ten years after you die. But you may want to give them enough to get through the rest of your apartment’s lease before they make new, more affordable housing arrangements.
7. Your family has a history of significant health issues
Do your parents have heart disease, diabetes, or other heritable health conditions? If you’re likely to be diagnosed with a condition like this in the future, buy life insurance now. While you’re still healthy, the insurance will be affordable. But if you are diagnosed with one of these conditions, it could get much more expensive.
Again, it’s best to plan for the future. If you want to have a family someday, plan to cover them with life insurance while you still qualify for affordable coverage. Then you won’t have to worry about it in the future.
8. Someone will have to deal with your end-of-life expenses
Even if you’re completely on your own, completely debt-free, and never want a family, you should still consider a small life insurance policy. This is because someone will need to pay your end-of-life and funeral expenses if the worst should happen.
A $10,000 to $25,000 policy is usually more than enough to cover these expenses. And it’s a good way to ensure that your friends and family members don’t have to go into debt to cover these expenses.
The Bottom Line
Chances are you fit somewhere on this list unless you have zero debt and significant savings as a single person. Term life insurance isn’t very expensive, especially if you’re in good health. For just a few bucks a month, you can make sure that should the worst happen to you, your family members will be provided for. If you aren’t sure who should be a beneficiary, how to divide the death benefits, or how to choose a policy, you might want to consider using Policygenius, a life insurance policy aggregator. If you’re super healthy, check out HealthIQ. They give steep discounts for running, swimming, proper dieting, and general healthy living.
Just be sure that you set up your life insurance beneficiaries correctly. This may be less intuitive for you than for married people with kids. And if you’re buying a policy for multiple reasons that span multiple relationships, it gets more complicated. So make sure that your will and beneficiary lists match and clearly specify what money goes to whom for what purposes.
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