If you’re single with no dependents, you might be wondering if you need life insurance — especially since it’s likely that no one is relying on your income other than you. However, the uses of life insurance can go beyond providing for a family after a death. Even if you’re tempted to forgo life insurance because you’re single, purchasing a life insurance policy may be a smart choice. Here are some questions to consider while you’re making that decision.
Why Should I Consider Life Insurance if I Am Single?
Sometimes people assume that life insurance exists only to provide income for a spouse or children after the policyholder’s death, but life insurance as a single person can do so much more. In some cases, it can even be used while you’re living.
1. It Can Help Cover Funeral Costs
Funerals are expensive. In the United States, the median cost of a funeral is $8,300, with prices ranging on geographical location and various options that you or your loved ones might choose. Even the more budget-friendly option of cremation is hefty. Relieving stress and financial hardship for your family is a huge benefit of carrying a life insurance policy, and a much-needed help especially if the cost was not anticipated.
2. It Helps Pay Off Debt
Family members aren’t typically responsible for debts when someone passes away, but that doesn’t mean those debts just disappear into thin air. After a person’s death, the debt — which might include car loans, credit card debt, medical debt, mortgages and non-federal student loans — can be transferred to the estate of the deceased. Then, the executor of the estate pays the debts with cash or by liquidating assets.
If the executor makes distributions to friends and family before the debts have been settled and leaves the estate without enough cash to cover the debt, the heirs could become responsible. Even if you don’t have a significant level of debt right now, an accident or illness preceding death can rack up medical bills that can create significant financial strain for those left behind. Having a life insurance policy as a single person can help pay for these debts and provide an extra layer of protection and comfort for loved ones.
3. It Helps Leave a Legacy
Everyone can leave an impact on the world. One way to ensure you’ve done so even after your death is to designate a life insurance gift left to a loved one or to charity. Designating a family member or charitable organization as the beneficiary of a life insurance policy can make a significant difference to causes you believe in and loved ones left behind.
4. It Can Help Cover Costs Associated With a Chronic Illness
Some permanent or whole life insurance policies offer an optional Daily Living Rider (as does Farm Bureau’s term life insurance). If you become chronically ill, activating this rider allows you to receive payments to help cover your expenses, relieving the burden that family or loved ones might experience.
5. It Can Help You Achieve Goals in Life
Permanent or whole life insurance can be an incredibly beneficial tool when you make major purchases or retire. These types of plans typically accumulate cash over time; after paying into the plan for a while, you can leverage that investment.
Additionally, having a whole life insurance policy may help you obtain a mortgage or loan; lenders sometimes consider this type of policy to be a liquid asset that you can tap into during times of financial stress. If you do decide to use it, you can borrow against the policy as you would a credit card or loan — keeping in mind that you will have to pay the loan back with interest or the value will be deducted from any death benefits.
Certainly, this isn’t the only reason to carry a life insurance policy, especially since it comes with some risks. However, it’s something to consider, and it can be useful to fund major purchases or your retirement.
Why Should I Consider Life Insurance Now?
Life insurance premiums are based on a variety of factors. Two of the greatest are your age and the state of your overall health. Think of it this way: you will never be younger than you are in this moment, so acting now will likely allow you to lock in the lowest premium possible.
How Do I Know What Kind of Life Insurance I Should Get As a Single Person?
Many people can get a group life insurance policy through their employer. However, you may want to consider purchasing an individual plan in addition to your work plan. Your group plan is typically limited to 1–3 times your salary, which may not be enough coverage for your beneficiaries’ needs after your death. Additionally, your group policy will likely be lost if you change your job. Purchasing an additional plan that is not tied to your workplace can ensure you have consistent coverage at a level that you determine fits your needs.
One way to an estimate of how much life insurance you might need as a single person is by using our calculator.
We Can Help You Plan For the Future
Whether you’re single, caring for dependents or just weighing your options, connect with your local Farm Bureau agent to start a conversation about your life insurance options.