If you’re single you might be wondering if you need life insurance — after all, no one is relying on your income except for you. However, the uses of life insurance actually go beyond providing for a family after a death. Even if you’re single, in many cases purchasing a life insurance policy is a smart choice.
Why Do I Need Life Insurance?
There is a misconception that the sole purpose of life insurance is to provide income for a spouse and/or children after death. However, having life insurance as a single person does so much more — and it can even be used while you’re living. Here’s how life insurance can benefit you as a single person.
1. It Helps Cover Funeral Costs
The average cost of a funeral in America ranges from $6,000 to $12,000. Even the more budget-friendly option of cremation costs an average of $3,000. For many families, an unanticipated cost of this size would cause significant financial hardship and stress.
2. It Helps Pay Off Debt
While family members aren’t typically responsible for debts when someone passes away, that doesn’t mean those debts just go away. Instead, the debt – such as car loans, credit card debt, medical debt, mortgage loans, and non-federal student loans — transfers to the deceased’s estate. The executor of the estate then 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 a layer of protection for loved ones.
3. It Helps Leave a Legacy
The impact that a person makes on the world can continue after death through 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.
5. It Can Help You Achieve Goals in Life
Permanent or whole life insurance can be a beneficial tool when you make major purchases or when you retire. These types of plans accumulate cash over time; after paying into the plan for awhile, you can leverage it. Just having a whole life insurance policy may make mortgage or loan applications easier and more likely to be accepted because the policy is considered 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. Doing so comes with some risks but can be useful to fund major purchases or your retirement.
Why Do I Need Life Insurance Now?
Life insurance premiums are based on a variety of factors; two of the largest are age and overall health. 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 I Need?
Many people can get a group life insurance policy through their employer; however, you should purchase 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. Also, your group policy will be lost if you change your job. Purchasing an additional plan that is not tied to your workplace will ensure you have consistent coverage at a level that you determine fits your needs.
You can get an estimate of how much life insurance you might need by using our calculator.
Connect with your local Farm Bureau agent to start a conversation about your life insurance options.