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Life Insurance for Single People: Do You Need It?
If you don’t think life insurance as a single person is necessary, it could be time to change your tune. Life insurance for single people has many benefits, including the ability to build wealth. In this guide, we’ve got all the details you need about getting a life insurance policy if you’re single. So read on and find out about the type of coverage that could be just right for you.
Do I need life insurance if I’m single?
Single people without a partner or children often feel that life insurance doesn’t apply to them. No one relies on your income, so why pay into a premium every month when there isn’t someone who could act as the beneficiary?
Yet, it’s not quite that simple, and there are some reasons why you might benefit from a life insurance policy. From covering the costs of your funeral if you passed away to building wealth when you’re alive, life insurance has more strings to its bow than a death benefit for your loved ones.
Below, we’ve listed particular scenarios where life insurance for single people could be hugely beneficial and help safeguard your future. Whether you’re single or not, young or old, there’s likely to be a good reason for getting life insurance.
Scenarios where life insurance for single people is beneficial
1. You want to build wealth
Life insurance doesn’t need to be all about cosigns, business partners, and dependents. With a permanent policy, you can also build wealth while you’re still alive, effectively using it as a form of a savings account. That’s because permanent life insurance has a cash-value aspect that allows you to grow your money. When you pay into the premiums, you cover the death benefit and cash value. Both grow each month, and you can access the cash value later down the line and use it for pretty much whatever you want.
2. You want flexible savings to use for the future
Permanent life insurance has options where you can either save in a high-interest savings account (IUL) or high growth investment account (VUL), that you can access whenever and for whatever you like either right away, or after a vesting period of 10 years, all tax-free. Investment properties? Remodeling the house? Dream vacation? You name it. Now you have a tax-free fund just for you.
3. You want to protect your own income in illness or injury
It’s especially important to protect ourselves when we’re single because let’s face it, who else is going to cover our backs but us? You can use permanent life insurance to protect yourself in illness or injury by accessing a large coverage amount if you suffer an unexpected illness or injury, or for later in life when the chances of us needing long-term care or contracting a critical illness are over 70%. That means that if anything hits the fan in your health, you won’t have to worry about bills, food on the table, and out-of-pocket care no income is coming in.
4. If you have debts
Americans owe a lot of student debt. Like, a lot. It’s even possible that your student debt could be as high as six figures, depending on where you went to college and what you studied. But who’s paying the loans if something happened to you? This is especially true if you have private student loans, with debts unlikely to be forgiven if you pass away. With a life insurance policy, your parents (or other guardians) wouldn’t need to front the cost if you left them with a high amount of student loans. It’s an affordable solution that won’t leave them out of pocket.
Talking of debts, what happens if you pass away and leave debt to other family members? Most of us have some form of car loan or credit that we owe, and if you have a cosigner listed, then they’ll need to front the costs if you’re no longer around. Again, this is where a life insurance policy comes in handy–it can be used to pay off your debts, so no one is left picking up your bill.
Another cosign conundrum here, as you may have a mortgage with a parent or sibling. Should the worst happen, the sums involved with a mortgage are vast, and the last thing you want to do is burden one person with such high payments. Therefore, getting a life insurance policy can safeguard the person you share the mortgage with and help them continue living in the property, as the payments will be covered by your death benefit.
5. You have financial dependents who aren’t your children
Being single doesn’t necessarily mean you don’t have dependents. You might provide financial aid to your aging parents or maybe even your grandparents, with them relying on you to help out. If the worst happens, suddenly, those who depend on you could find themselves facing financial difficulties. However, if you name them as the beneficiary on your life insurance policy, they can receive the death benefit, so at least they won’t have to worry about their financial aid being disrupted.
6. You have business partners
More people are running their own business these days, some alone, others with a business partner. It might be worth looking into a life insurance policy, as it could be required to get a business loan. On top of that, having life insurance coverage could protect the business if something terrible happened to you. Without it, your business partner would likely become liable to pay all the debts, which could put a strain on operations. With life insurance, though, your partner can carry on running the business with the help of the death benefit.
7. What about when you do meet that special someone?
You might be single now, but who knows what the future holds. Instead of waiting until you meet someone to start a family with, why not take out life insurance now? If it’s a perm policy, it means you can grow the cash value and put yourself in a more favorable position by the time you do have a family, as opposed to starting from scratch when your kids are born.
8. Which type of life insurance should I get?
A term life insurance policy lasts for a specific amount of time, usually anywhere between 5 and 30 years. If you only want limited coverage–say, to cover your mortgage payments–a term policy could be useful. It’s the cheapest form of life insurance and essentially covers your named beneficiary should you pass away. However, once the policy expires, that’s it–there are no added benefits. Plus, if you wish to extend the policy, you will be charged at your renewal age, which means it will most likely cost more as you’re older.
A permanent life policy has more expensive premiums compared to term, but it’s arguably more value for money too. We’ve already touched on the cash-value aspect, which allows you to build wealth while you’re still alive. Even better, unlike other savings accounts, the money you accrue is tax-free. When you withdraw the cash value, you can do so as a 0% loan against yourself. Because you can’t pay tax to yourself, the money you take is completely tax-free. When you pass, the death benefit pays back the loan, with what’s leftover going to your named beneficiary.
In conclusion: life insurance for single people
You don’t need a family to benefit from life insurance, especially if you’re getting a permanent policy. Life insurance for single people can be a great way to build savings and set yourself up later on in life while also giving you the added bonus of a death benefit to leave to the people you care about the most.