Simple Reasons Why Single People Should Opt for Life Insurance
Contrary to what many people think, life insurance isn’t something only people who are married or have kids need to buy. It’s a very common misconception which needs to be laid to rest, that you don’t need life insurance if you’re young and single.
When it comes down to bare facts, life insurance is designed to help you protect and grow wealth in your lifetime, with the additional benefit of estate management assistance after your demise. Let’s look at it in simpler terms and understand why you may need to get yourself a policy after all.
Do I Need a Life Insurance Policy?
If you’re wondering whether you should invest in life insurance, ask yourself these questions (and answer them honestly!):
If you’ve answered ‘yes’ to one or more of these questions, you’ve already got financial responsibilities that you need to take care of. Let’s face it – life is unpredictable and you never know when something untoward can happen, with no warning. On the off chance that you die while you’re still young, who will take care of your responsibilities?
- Do you own a business or play a key role in one? Are you a freelancer or self-employed professional?
- Do you support your parents, young siblings or pay child support/alimony? Are you planning to get married and start a family in the near future?
- Did your family pay for your college tuition with loans or did you take out a student loan for your education?
- Do you currently have any debts that need to be repaid, like student loans, credit cards, personal loans, car finance, etc.?
- Have you invested in a house, condo or land? Do you pay rent or EMIs toward your housing expenses?
Add up your loans and debts for a start, and then add another $10,000 to it. That’s right, 10K. Wondering what that’s for? Believe it or not, it’s the average cost for a funeral in the U.S., which someone is going to get saddled with if you haven’t made arrangements before your death!
Why Do I Need life Insurance if I’m Single, Anyway?
Okay, so we’ve established that you have some financial responsibilities and aren’t quite as ‘free’ as you’d like to think. Your next question is likely to be, ‘How can life insurance help me with this?’ or ‘Where does life insurance come in?’, and you probably also wonder why you should spend money on a premium when you have all these bills to pay.
Most people believe that life insurance is expensive, something you should invest in when you enjoy financial security and a steady income, with some savings in you bank too. Well, that’s another common misconception that we’re going to set at rest. A modern life insurance plan could in fact cost you as little as a dollar a day!
Fact 1 – A Term Life Plan is Very Affordable
If you buy a life insurance policy when you’re young and healthy, it costs very little, really. Whole life insurance premiums are somewhat expensive, but it’s nothing compared to the lifetime benefits you receive. If you’re wary about setting aside that much money, you could opt for a term life plan, which costs less than a fancy dinner once a month.
Here’s an example to consider – as a male non-smoker between the ages of 20-25, a 30-year policy with $100,000 of coverage would cost less than $15 a month, and if you invest around $60 a month, you could get up to a million dollars of coverage. The other draw of term life insurance is its flexibility – you can choose the duration of the term for which it’s active!
Fact 2 – A Policy is Cheaper When You’re Single
When you buy a policy as a young and single individual, you will get lower quotes than you will later, when you’re married and have kids. It may seem like that’s a long time away, but when it does happen, you’ll be able to protect your family against financial loss at any time in the future. Someday, the expenses of a family will be added to your own – housing, tuition, food and clothing, daily needs, the whole gamut.
If you wait to shop for life insurance when you’ve already got a spouse and children, you will pay a lot more than you would now. Even if you stay single all your life, a life insurance policy can supplement your income and keep your financial burdens from falling to your parents, siblings or other family members.
Fact 3 – You Can Name Any Beneficiary You Want
Maybe you feel that there is no use getting insured if you don’t know who will receive the benefits in case of your demise. You can choose to have the proceeds given to a family member or even a charitable organization, tax-free. This allows you to create a backup for anyone who might be financially affected by your death and arrange coverage for your debts too.
Additionally, you can change the beneficiary of your life insurance plan at any time. In case you’ve gotten married or have kids long after you signed up for a policy, just contact your insurance agent to have the beneficiary details changed!
Fact 4 – Life Insurance Creates a Financial Backup for You
The proceeds from your life insurance plan are not limited to death benefits alone – you can enjoy them during your lifetime. Certain life insurance plans act as personal investment, building your savings and offering returns on the money you pay as a premium. If you were to cash in your plan during your lifetime, you would receive tax-free funds in hand.
Most policies build a cash value based on the amount you have paid as premiums, whether payments were made on time and whether you put extra funds into them. They’re a great choice for people who earn more than they can put into a
Roth IRA or tax-free/tax-deferred savings plans.
Fact 5 – It Makes Sense for Your Business Too
If you’re an owner or partner in a business, your demise would affect the company too, possibly undoing everything you have built in your lifetime. With a life insurance plan in place, your partners can purchase your share in the company more seamlessly, allowing work to continue and profits to be maintained, without a hitch.
The Bottom Line on Life Insurance
When you’re young, single and relatively carefree, it’s easy to believe that you’re invincible, but it’s always a good idea to be prepared. Illness, accidents and disasters can strike with no warning, leaving your loved ones in financial trouble that adds to the anguish they feel at your loss. You can make sure they’re not left adrift, or even contribute to a worthy cause if you prefer.
You can always change or add on to your existing coverage later in life, as things change and you have more people depending on you. Even during your lifetime or post-retirement, you can enjoy the benefits of a life insurance plan that fits you perfectly, so get in touch with an insurance agent and discuss your options today!