Many say the life of responsibility begins when you walk down the aisle and say, “I do.” Still others believe it truly begins when you have a child. Certainly having a child can make you question your values and what you believe to be important in your life as well as make many people want to be more financially responsible. Often, a couple finds the time immediately after the birth of a child to be a good time to buy life insurance.
The thing is, you may want to consider purchasing life insurance even before your first child is born.
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Do You Need Life Insurance?
Life insurance for a grown adult with no dependents is often considered unnecessary. Yet, if you are childless, you may want to consider purchasing it if a few factors apply.
Would your parents experience financial hardship paying for your funeral?
Although we like to think our parents would have enough money to afford a funeral should we pass, that is not always the case. My brother passed away several years ago at the age of 29, and my mom, who has worked as a secretary for the majority of her life, had trouble finding the money to pay for the funeral. As a parent, it is hard enough to lose a child, let alone worry about how to pay for the funeral. As a young, single adult, a life insurance policy that is small enough to cover the cost of a funeral, which usually costs between $7,000 and $11,000, would only be a nominal monthly expense.
Do others depend on your income?
If you have a significant other who depends in part on your income, could he or she survive without it? Many couples buy homes together but rely on both incomes to afford the house. If you were to pass, would your spouse be able to afford the home and the standard of living you are accustomed to? Some may argue that your spouse may be able to just sell the home should you pass, but again, grieving is difficult enough. Do you really want your spouse to have to worry about paying for your funeral, selling the home you have made together and selling your car because they are no longer affordable on one income? Those things may happen with time, but a life insurance policy affords your partner a chance to grieve and take time from work, if necessary.
If your income is significantly higher than your spouses, buying life insurance becomes even more essential. A good policy could allow your spouse time to increase income or finish his or her education, if that is the case. Both raising income and completing an education take time, as does grieving. A life insurance policy affords your spouse the time he or she may need to get life in order without you.
Will you be having children in the future?
Life insurance policies are at their lowest when you are young and in good health. If you are 25 now and planning on having children in the next few years, it may be worthwhile to get the policy now and buy it for an extended amount of time, such as a 20 or 30 year term life insurance policy so you can pay the lowest rate available.
Some may argue that there is no need to buy a separate policy because you can purchase life insurance through work. While life insurance provided through work is a nice option, it is unreliable in that you could lose your job and, as a result, lose your life insurance. In general, it is better to have your own private policy with work-provided life insurance as a nice supplement.
When you are young, you feel that nothing can happen to you and that you don’t need to worry about products like life insurance. However, even if you don’t yet have children, investing in a life insurance policy may be a smart financial move for you and your immediate family members.
I was one of those that didn’t really think about buying life insurance until we had kids because we both had jobs that would allow us to stay afloat if the other spouse was to die. Looking back now, however, I do kind of wish we had bought some term life insurance before we did as I think the rates may have been a bit lower than we’re paying now – and for my wife – she has since had a health issue that makes life insurance a bit less affordable for her.
Have you given any thought to making some of that permanent? If her health issue is one that is going to persistent for the rest of her life (i.e. Type 1 diabetes) it will literally never get cheaper?
Did you get it priced out? or did you just assume it was too expensive? or not really into it?
Melissa,
I also encourage young singles to go ahead and get 20-30 year term, but its a hard sell as death and having dependents isn’t on their radar. Any suggestions on how you encourage them to go ahead and buy when the rates are cheap and they are insurable?
You could start by showing the difference in rates for a 25 year old versus a 35 year old or a 45 year old. Many people may start running into health issues including diabetes as early as their thirties or forties, which can make life insurance premiums very expensive. I learned the hard way because my dad died young (38) with very little life insurance, so I watched the struggle first hand, which made me very responsible with my own health insurance. Perhaps if they also talk to others who have had parents die young, they may be convinced.
Melissa, Sounds like you know from first hand experience, sorry you had to go through that loss.
I like that approach. Using both charts & facts along with real stories will catch the analytical and emotional components.
Thanks for sharing additional things to consider for us, childless folks.
I hadn’t thought of the benefits of starting early with life insurance to lock in the best rates. I’m going to look into what my options are!
If I didn’t work for a life insurance company before I definitely would not have any. I’m only 24, no kids, and single. Popular opinion says I wouldn’t need it. But I took out a 500k term to age 80 (increasing premium) and it started out at 15 dollars a month. Now it does get very expensive but not until I am like 50. It stays under 60/month all the way until then. But with my adventurous lifestyle with the daredevil that I am, if I ever get hurt or lose insurability, I am glad that I have it.
Another purpose of life insurance for those without dependents is to support the ministries and charities that you care about at your death.
Thanks for the article!
Add another reason to the list: you may one day decide to retire.
Starting a permanent cash value policy when you are young allows additional years for cash values to grow inside a whole life or universal life policy. Rates are far cheaper when purchased while you are still young, and your health tends to be better than later in life.
The cash values can be used to fund college expenses, provide a retirement nest egg, or pay a benefit upon death. Having some level of permanent coverage in place is a good idea.