If you are single with no dependents, do you need life insurance?
Bogdan Kurylo/Getty Images/iStockphoto
There are so many types of insurance – health insurance, car insurance, home insurance, etc. – that it can be difficult to determine which covers you really need. Life insurance helps ensure that all financial obligations are taken care of in case your dependents suffer a loss of income due to your death – but do you need this type of insurance if you don’t have dependents?
SNAP 2022: Is my state giving extra money in April?
2022 stimulus checks: is your state handing out money this year?
GOBankingRates spoke to financial planners and insurance agents to get their perspective.
You probably don’t need life insurance if you’re single with no dependents
“If you’re single and have no dependents, there’s very little reason to buy life insurance,” said Jay Zigmont, PhD, CFP, founder of Live, learn, plana Mississippi-based financial planning company that specializes in helping people without children.
However, if you have non-human dependents, this may be something to consider.
“I’ve seen some people buy life insurance to support their animals after they die,” Zigmont said.
But it’s better to buy life insurance when you’re healthy
Even if you are currently single with no dependents, you may still want to purchase life insurance if you think you will have dependents in the future.
“A person’s health may change and a person may become uninsurable in the future,” said Shane Canfield, CEO of WAEPA, a non-profit organization providing life insurance to civilian federal employees and their families. “The best way to overcome this possibility is a whole life insurance plan with an option to purchase additional coverage at regular intervals without underwriting.”
Discover: the best and the worst life insurance companies
Life insurance is also cheaper to get when you are younger and in good health.
“Young people may want to buy insurance because it’s cheaper and they can protect their insurability, or because they plan to start a family later in life,” said Chris Seabrook, a representative for the ‘insurance Agency. Country Financial.
There are other reasons you might want life insurance
“Even if you’re single with no dependents, one of the main reasons for having life insurance is to pay off any debt you may have accumulated,” said Wilson Coffman, president of Coffman Retirement Group in Huntsville, Alabama. “Life insurance allows you to leave behind or take responsibility for any financial responsibilities that have arisen. You don’t want to leave this world placing the responsibility or burden on family members, friends, colleagues or business partners.
It can also help cover funeral costs.
“Whether you realize it or not, there will be costs to your death,” Coffman said. “Burial costs can reach tens of thousands of dollars. Someone has to pay for these last expenses. Again, life insurance can help ease the burden on any entity or family member.
Another reason you might consider buying life insurance is to leave an inheritance.
Learn: How to get the most savings from your health insurance
“Life insurance is a tax-free benefit,” Coffman said. “Any life insurance passed on to beneficiaries is tax exempt, allowing the funds to make a difference in someone else’s life or even charity.”
What coverage do you need?
If you’re single with no dependents, but decide to buy life insurance, you may not know how much coverage you need and who you should designate as beneficiaries.
“Typically, the average coverage amount is 10 to 12 times your income,” Coffman said. “As for your beneficiaries, you should list several people who will be responsible for managing your estate after your death. This can include parents, siblings, cousins, or even close friends. These beneficiaries will receive your remaining estate once all debts have been settled.
Your beneficiaries could also include a trust or nonprofit organization, Seabrook said.
More from GOBankingRates