Single person: Why you should consider life insurance
If you’re single, you may be wondering if you need life insurance; after all, you’re the only one who relies on your income. However, the benefits of life insurance extend beyond simply providing for a family after a death. Even if you are single, purchasing a life insurance policy is often a wise decision.
What Is the Purpose of Life Insurance?
There is a widespread misconception that the sole purpose of life insurance is to provide income for a surviving spouse and/or children. However, having life insurance as a single person accomplishes far more — and it can even be used while you are still alive. Here are some ways that life insurance can help you as a single person.
The average funeral costs between thousands of dollars. Even the less expensive option of cremation costs an average of $3,000. An unanticipated cost of this magnitude would cause significant financial hardship and stress for many families.
While family members are not usually held liable for debts when someone dies, this does not mean that the debts simply disappear. Instead, debts such as car loans, credit card debt, medical debt, mortgage loans, and non-federal student loans are transferred to the estate of the deceased. The estate’s executor then pays the debts in cash or by liquidating assets.
If the executor makes distributions to friends and family before the debts are settled, and the estate does not have enough cash to cover the debt, the heirs may be held liable. Even if you don’t have a lot of debt right now, a car accident or illness prior to death can rack up medical bills that can put a strain on those left behind. As a single person, having a life insurance policy can help pay off these debts while also providing a layer of protection for loved ones.
A person’s impact on the world can live on after death through a life insurance gift left to a loved one or to charity. Making a family member or a charitable organization the beneficiary of a life insurance policy can make a significant difference to causes you care about and loved ones who are left behind.
Some permanent or whole life insurance policies include an optional Daily Living Rider. If you become chronically ill, you can receive payments to help cover your expenses if you activate this rider.
Permanent or whole life insurance can be a useful tool when making large purchases or retiring. These types of plans accumulate cash over time; after a period of time, you can leverage it. Because the policy is considered a liquid asset that you can tap into during times of financial stress, simply having a whole life insurance policy may make mortgage or loan applications easier and more likely to be accepted.
If you do decide to use it, you can borrow against the policy in the same way you would a credit card or loan, with the caveat that you must repay the loan with interest or the value will be deducted from any death benefits. This carries some risks, but it can help you fund large purchases or your retirement.
Why do I require life insurance at this time?
Life insurance premiums are determined by a number of factors, the most important of which are age and overall health. You will never be younger than you are now, so acting now will most likely allow you to lock in the lowest possible premium.
How Do I Determine What I Require?
Many people can obtain group life insurance through their employer; however, in addition to your work plan, you should purchase an individual plan. Your group plan’s coverage is typically limited to 1-3 times your salary, which may be insufficient.
If you change jobs, you will also lose your group policy. Purchasing a separate plan that is not linked to your employer will ensure that you have consistent coverage at a level that you determine meets your needs.
