Do you need life insurance if you’re single?

Single people often say that life insurance isn’t necessary for them because, well, it’s just “me, myself, and I.” (And because policies won’t allow you to put your pet as a beneficiary... at least not yet.)

But the truth is: you don’t need a family to benefit from life insurance — and the peace of mind you’ll get when you can live the life you’ve always dreamed of (whether that be homeownership, a future family, continuing education, or entrepreneurial endeavors), without worry that your loved ones would have to take on these obligations if something were to happen to you.

Still not convinced? Keep reading to find out more!

Do single people need life insurance?

The short answer? Yes.

The long answer, however, is probably a lot more convincing: if you have unpaid debts, dependents (whether they are your children or other family members), business partners, or plans to start a family one day, single people should look into life insurance. Here’s why: 

Life insurance can pay off your debts.

No matter if it’s student loans, a mortgage, a car loan, or credit card debt, if the unexpected were to happen to you, someone could be in the unfortunate position of having to pay it back. In some cases, if you have savings or investments, you might have enough to cover most of what you owe. But in others, it’s unlikely that can even scratch the surface.

(Especially when we’re talking mortgages.) Ensuring your parents, past partners, children, or any other loved ones don’t get the burden of your debt is one of the most important reasons why single people need life insurance.

Life insurance can provide for your dependents.

Being single doesn’t necessarily mean you don’t have people relying on you. If you’re single but have children or provide financial support to your parents or other family members, it’s important to make sure you and your dependents have the peace of mind their future is taken care of.

There’s also another way to provide for others if you’re not here — you can donate your term life insurance death benefit to charity. It’s simple: just name the charity of your choice as the beneficiary. It’s a great way to leave a legacy behind for a good cause. (Tip: make sure to let a few loved ones know so they can facilitate the gift if needed.)

Life insurance can facilitate a partner buyout if you have a business.

Owning a business is a wonderful accomplishment that you can pass on to a family member or your children if they choose to follow in your footsteps. Or, if you have a business partner, a term life policy is a great way to cover buyout costs or other related expenses. To learn more about term life insurance for business owners, click here. 

Life insurance can bring peace of mind to your future plans.

Whether it’s a marriage, family, business, or homeownership, you can achieve your goals with confidence, knowing you have a life insurance policy that you (and those closest to you) can rely on. Plus, the younger you are, the lower your monthly premium costs will be for a term life insurance policy. That’s right: you can lock in a low rate for 10, 20, or even 30 years — and get back to building what you’ve always dreamed of.

What happens to your debt if it’s left unpaid

Unfortunately, your debt is not forgiven if you pass away. Your debt ends up becoming part of your estate (or all the money and property you own). But what happens if you don’t have term life insurance or enough money saved?

By law, no one else is legally obligated to repay your debts, but there are exceptions:

• If there was a co-signer on a loan (including private student loans), the co-signer owes the debt.

• If there is a joint account holder on a credit card, the joint account holder owes the debt. (Note: this is different from an authorized user, who is not usually responsible for the debt.)

• If you live in a community property state, where both spouses own an equal share of property, bank accounts, and debt. (Though we understand this is a blog about singles, it’s important to keep this in mind!)

Suppose you own a home without a spouse or co-signer. In that case, lenders will typically give your family members some time to decide who (if anyone) can take over the mortgage payments or pay for the home with your estate (or life insurance payout). If your estate has insufficient funds and no family members possess your home, your lender will. This applies to car loans, too. In other words, if you want to make sure that your loved ones have a home, car, or another tangible piece of property — without the stress of paying it off — a life insurance policy is sure to provide that.

Is employer-sponsored life insurance enough if you’re single?

A lot of employers offer life insurance as part of their benefits package. If you’re lucky enough to be a full-time eligible employee, this is a great option! But the real question is: would it be enough for you?

To find out, consider a few things:

• Your loans and liabilities (like your mortgage or debts, if you have any).

• Your funeral expenses (which can be upward of $10,000).

• The amount of extra money (if any) you’d like to leave behind to family members, friends, or charity.

This all adds up to what would be your L-I-F-E number (Loans + Income + Funeral + Education). In other words, how much life insurance you actually need. Typically, employer-sponsored life insurance will cover one times your annual salary. If your calculations greatly exceed your annual salary, it might be time to look into getting a supplemental life insurance policy.

It’s also worth noting that you’ll lose your employer-sponsored life insurance if you leave your job. So if you plan on becoming self-employed or switching jobs soon, consider going with a policy on your own — and fast, so you can lock in the lowest possible rate.

What type of life insurance should single people have?

Generally speaking, term life insurance is the ideal choice for single people. It can help you cover your debt and ensure your dreams today won’t burden loved ones tomorrow.  

Term life insurance is intended to be a low-cost option for a specific period of time — or, a term. Most terms can be renewed, even if the state of your health changes, but your premium might be higher. 

Term life policies:

• Can be purchased for a set time period, like 10, 20 or 30 years.

• Can be converted to whole life insurance.

• Becomes more expensive as you age.

• Are paid out only if you die while the policy term is in effect.

• Have low monthly costs with easy signup.

• Can be customized with a term life insurance rider (or a few!).

On the other hand, whole life insurance is more complex and recommended for those with a high net worth and a large family. It’s lifelong coverage with an investment component, which is known as the policy’s cash value.

Now let’s suppose you’re not ready to commit to a whole life insurance policy. Many life insurance companies have the option of upgrading your term life insurance policy to a whole life policy up to five years before your initial policy ends. 

If you’re single, don’t assume that life insurance won’t be beneficial for you.