Most singles be they in their 20s or even 50s do not carry life insurance. They reason that since they don’t have spouses or dependents, there is no reason to purchase life insurance as their death won’t leave anybody in a financial bind.
But that reasoning is not always sound and there are a number of circumstances when a single person should consider carrying a life policy:
They have debt
One of the main expenditures of life insurance payout recipients is paying off the debts of the deceased policyholder.
Singles may have debt and if anyone has co-signed on any loans they have taken out, their death means the co-signee would be on the hook for the outstanding debt. They may also have a shared mortgage, which would leave the cosigner on the hook.
Also, if they carry student loans, those debts are not discharged when someone dies. Anyone that co-signed on those loans could be forced to shoulder that debt themselves.
If you are single with debts that have co-signers, you may want to consider a term life insurance policy that would pay off your portion of the loan.
They have people who depend on them
Singles may have children, or perhaps they are helping take care of a nephew, a disabled sibling or their parents. If someone has such responsibilities, those relatives are dependent on them to varying degrees.
If your passing would create a financial hardship on someone, it might be time to consider life insurance.
They own a business
If you suddenly die as sole owner or a partner in a business, your death could threaten the ongoing viability of your company. There is a special type of insurance for this situation called “key person” insurance.
A company purchases a life insurance policy on a key employee, pays the premiums and is the beneficiary of the policy. If that person unexpectedly dies, the company receives the insurance payoff.
This payout can help the keep the company afloat after losing the person who makes the business work. The company can use the insurance proceeds for expenses until it can find a replacement person, or pay off debts, distribute money to investors, pay severance to employees or close the business down in an orderly fashion.
Covering funeral expenses
The average funeral costs between $7,000 and $12,000, and nobody wants their parents or siblings to have to foot the bill for that if they can afford it.
With a small life insurance policy in a loved one’s name, you can make sure they can use the life insurance proceeds to give you a proper send-off.
Growing your wealth
There are many types of life insurance and some policies, like permanent life coverage, can benefit you while you’re alive.
Permanent life policies combine a life insurance policy with an investment policy, and they give you a death benefit while accumulating cash value on a tax-deferred basis. You can use that accumulated cash to increase your personal wealth or to buy a home, supplement your retirement income, cover an emergency expense, and more.
Locking in low rates now
The younger you are when you purchase a life insurance policy, the lower the premium. Younger people are often healthier, so that also helps drive the premium down.
If you buy a policy while you’re young, the monthly premium will be much lower than if you wait until you are older or have health problems.
Leaving a legacy
Some people would like to establish a legacy by leaving behind money for their alma mater, a religious organization or charity.
You can take out a policy that has a number of beneficiaries like the ones mentioned above. They can use those proceeds to work on projects you consider important.
There are many reasons a single person would want to consider a life insurance policy, and at least one of the above scenarios would strike a chord in almost everyone.
Just because you are single, doesn’t mean that a life insurance policy isn’t right for you.